November 28, 2008 Update
The chart below shows that certificates of deposit (cd) as well as savings and money market accounts continue to hold up despite the weakening economy and the prospect of the Fed cutting rates to .50% or even .25%.
The drop in rates last week ranged from 2 basis points for 1 year certificates of deposit to 10 basis points for 5 year cds. Rates have experienced a very gradual decline since peaking in early October. If the Fed does cut by another 50 basis points down to .5%, as the markets seem to think it will, then it's hard to imagine that rates on savings accounts, cds, and money markets won't fall further.
We still believe the trend supports a gradual drop on the rates paid on savings accounts, CDs, Money Markets, and other cash equivalent securities. If you have money you wish to deposit in a certificate of deposit, you may want to do it sooner rather than later before yield erodes further.
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