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fed fund rate cut - how long before cds
Old 10-08-2008, 06:18 AM   #1
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fed fund rate cut - how long before cds

This morning the fed fund rate was cut by .5, now 1.5%

How long does it usually take before the prime and cd rates come down ?
Was planning on CD purchases this Friday.
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Old 10-08-2008, 06:32 AM   #2
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The prime cuts will be quick - probably this morning not that "prime interest rate" means much these days. I'm not too sure how much it will impact CD rates though. Banks are still very hungry to get deposits to build their capital ratio.
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Old 10-08-2008, 06:43 AM   #3
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It appears that the only time the market ticks upward is when the FED makes a dramatic move. One has to wonder how many more arrows there are in the FED's quiver.

I don't see how this latest move is going to do any good. Financial institutions are AFRAID to lend. Cheap money isn't going to change that.
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Old 10-08-2008, 06:49 AM   #4
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It does have an impact on my HELOC (and most others) tied to the Prime Rate: about a $40 drop in monthly interest only payments.
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Old 10-08-2008, 06:54 AM   #5
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It appears that the only time the market ticks upward is when the FED makes a dramatic move. One has to wonder how many more arrows there are in the FED's quiver.
The question is: When do the sellers move in and kill the likely rally at the open?
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Old 10-08-2008, 07:04 AM   #6
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5% 12 mo CD from Wamu was there yesterday, gone now (down to 3%!)
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Old 10-08-2008, 07:57 AM   #7
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I don't see how this latest move is going to do any good. Financial institutions are AFRAID to lend. Cheap money isn't going to change that.
The coordinated rate cut is a shot in the arm, but not a magic bullet. More interesting to me is what the UK gummint is doing with there banks (where a lot of the problems are hiding out). Dunno if the US gummint will ever do anything similar, but it will clear out a lot of the potential problems in the UK.
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Old 10-08-2008, 08:12 AM   #8
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Wow, futures did a BIG U turn. From about plus 125 to minus 180 (Net). So much for the rate cut helping stocks.
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Old 10-08-2008, 08:16 AM   #9
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Wow, futures did a BIG U turn. From about plus 125 to minus 180 (Net). So much for the rate cut helping stocks.
See my comment above. In this market, selloffs into rallies are never a surprise.
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Old 10-08-2008, 08:18 AM   #10
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5% 12 mo CD from Wamu was there yesterday, gone now (down to 3%!)
Capital One 5.5% APY today - but long term (5 and 7 Year CD).
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Old 10-08-2008, 08:58 AM   #11
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Capital One 5.5% APY today - but long term (5 and 7 Year CD).
Be careful on those..........once the liquidity crisis ebbs, rates will be going up..........
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Old 10-08-2008, 09:09 AM   #12
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Be careful on those..........once the liquidity crisis ebbs, rates will be going up..........
Total agreement on this point!

All my CDs are maturing before the end of 2009. I've got a few 5+% getting ready to mature which hurts when I see short term CDs available through ETrade yielding around 3%.
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Old 10-08-2008, 10:18 AM   #13
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I do not know, I have been doing CD Ladders for almost 30 years and have never gotten burned by rates. Current Ladder goes to 2014 (at 5.7%) and will be filling the 2016 and/or 2019 rungs on rollovers coming in 2009 at those rates, if still available. Everyone says rates are going up, for about the last 2 years, but Mr. BB keeps lowering them.
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Old 10-08-2008, 10:21 AM   #14
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Whew! Wow - I opened a couple of short term CDs YESTERDAY. I was scrambling over the past few days because I figured a Fed cut was imminent. Never thought I'd own CDs, but with the current financial situation, I figure I better take advantage of some FDIC insurance.

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Old 10-08-2008, 10:25 AM   #15
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I do not know, I have been doing CD Ladders for almost 30 years and have never gotten burned by rates. Current Ladder goes to 2014 (at 5.7%) and will be filling the 2016 and/or 2019 rungs on rollovers coming in 2009 at those rates, if still available. Everyone says rates are going up, for about the last 2 years, but Mr. BB keeps lowering them.
Laddering is the reason you haven't been burned......... Just make sure to have enough in the markets to battle inflation risk, CD ladders do NOT beat inflation..........
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Old 10-08-2008, 10:33 AM   #16
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Laddering is the reason you haven't been burned......... Just make sure to have enough in the markets to battle inflation risk, CD ladders do NOT beat inflation..........
Of course it helps to be "older than dirt" then Inflation is not a threat.
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Old 10-08-2008, 02:23 PM   #17
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... Never thought I'd own CDs, but with the current financial situation, I figure I better take advantage of some FDIC insurance.

Audrey

Me too...I bought some short term CDs basically to get the money out of my money market fund... trying to establish some "buckets", in the past the MMF has served as a sweep account for checking,emergency savings, big ticket item spending source of funds. I also started another bucket of savings into a PENFED account for emergency cash.

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Old 10-08-2008, 02:32 PM   #18
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I also thought I should have more money at the same institution with my checking account in case there was some kind of disruption or delay in transferring funds from my brokerage to my bank. So I guess I also think of this as moving an "emergency" fund over to an FDIC insured bank. One of the short term CDs I bought has no penalty for early withdrawal.

Besides, the current Fed MM fund guarantee program is only for three months. That's not very long! I expect they'll extend it. But still, one has to be prepared for potential disruptions, etc.

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