July Offers No Relief From Falling CD Rates

I guess this is what we can expect from the “new normal.”

CD rates fell for the 21st straight month in July.

The average return on all five of the certificates of deposit we track finished the month lower than they were at the end of June.

A year ago it was inconceivable that the Federal Reserve would still be pushing interest rates to new and depressing record lows this summer.

Now it’s inconceivable that the Fed will relent any time this year.

The term “new normal” was coined by Bill Gross, the co-chief investment officer of Pacific Investment Management Co., the giant investor in government and corporate bonds.

Gross says we’re in for a prolonged period of slow growth, high unemployment, increased government intervention in the economy and lower returns on virtually every type of investment.

Bankrate’s weekly survey of large banks and thrifts taken July 28, found the average annual yield for a:

3-month CD ended the month at 0.27%, down from 0.28% in June and 0.36% at the start of the year. It’s the lowest average since the survey began tracking 3-month CD rates in March 1989.

6-month CD has fallen to 0.38%, down from 0.40% last month and 0.50% at the start of the year. It’s the lowest average since the survey began tracking 6-month CD rates in January 1984.

1-year CD has fallen to 0.67%, down from 0.69% last month and 0.82% at the start of the year. It’s the lowest average since the survey began tracking 12-month CD rates in October 1983.

2-year CD has fallen to 1.04%, down from 1.09% last month and 1.24% at the start of the year and is the lowest average since the survey began tracking 24-month CD rates in March 1989.

5-year CD declined to 1.99%, down from 2.00% last month and 2.10% at the start of the year. That’s the lowest average rate since the survey began tracking 60-month CDs in January 1984.

With average returns this low, you’ve got to take advantage of any better-than-average CD rates you can find in our database.

For the latest on “What the bond guru sees coming” here’s a new interview with Bill Gross on CNNMoney.com.