Stuck in a Rut -- the Bank Rate Blahs

Market interest rates moved up smartly in the last month of 2009, but since then they've been stuck in a rut. Since bank rates are ultimately likely to follow market interest rates, the recent lack of progress for interest rates means that bank rates are likely to stay stuck in the same rut.

Yields on 10-year U.S. Treasury bonds have been bouncing between 3.55% and 3.85% more most of this year so far. The good news is that periodic declines have been checked before rates fell too far. The bad news is that rates haven't been able to break through on the upside. Last week was a bit of a recovery week, as rates edged back up to around the 3.70% level after a steep drop the week before.

The lack of a sustained direction in interest rates reflects indecision about the strength of the economy. Economists generally agree that the U.S. is out of recession, but few observers seem very confident about the length and vitality of the economic recovery. Oddly enough, stock investors seem to be more optimistic, as stocks have had quite a strong run since the end of January. However, until that optimism about the economy spreads to the bond market, there won't be support for a sustained move higher in interest rates.

This means that finding higher bank rates still comes down to smart shopping. On MoneyRates.com, you can find savings account rates, money market rates, and CD rates that are considerably higher than the national averages. Until the market starts to move, your best shot at higher bank rates is to actively look for them.

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