Signs of 2009 Dollar Devaluation and Crashing Bonds?

[rdgmail]

Or Simply Banks in Desperate need of cash?

While deflation is the red hot topic in the news these days, yesterday I noticed that Capital One is now offering 5.5% APY on a 7 year CD.
http://www.capitalone.com/directbank...ndefined_T_SP2
(If the link doesn't work, go to Capital One website and search for CD rates). If you want to park cash for seven years and you qualify for FDIC insurance, it's the best rate I've found (not investment advice).

But why would Capital One offer such a high rate? I presume it is because they desperately need cash and selling preferred shares or bonds would cost them much more than 5.5% right now. But perhaps they are front-running the great bond crash of 2009(?) that some are calling for. http://www.atimes.com/atimes/Global_.../JK12Dj07.html

[phirang]

Re: Signs of 2009 Dollar Devaluation and Crashing Bonds?

the treasury market in 2009 will be like looking for hotties on the "biggest loser"

[metalman]

Re: Signs of 2009 Dollar Devaluation and Crashing Bonds?

Or Simply Banks in Desperate need of cash?

While deflation is the red hot topic in the news these days, yesterday I noticed that Capital One is now offering 5.5% APY on a 7 year CD.
http://www.capitalone.com/directbank...ndefined_T_SP2
(If the link doesn't work, go to Capital One website and search for CD rates). If you want to park cash for seven years and you qualify for FDIC insurance, it's the best rate I've found (not investment advice).

But why would Capital One offer such a high rate? I presume it is because they desperately need cash and selling preferred shares or bonds would cost them much more than 5.5% right now. But perhaps they are front-running the great bond crash of 2009(?) that some are calling for. http://www.atimes.com/atimes/Global_.../JK12Dj07.html

a bond crash is the flip side of poom. the rich cd rates were noted over here...



my take is default risk commands higher rates but the desperate search for deposits is just as likely... or both.

[phirang]

Re: Signs of 2009 Dollar Devaluation and Crashing Bonds?

a bank will pay 6% if they're lending at 15%.

go look at the comm paper market...

[sunskyfan]

Re: Signs of 2009 Dollar Devaluation and Crashing Bonds?

Just watch the 1-month T-bill for a clue. It is hovering very low. Almost as low as during the "crisis" a month ago. People are parking cash in a safe haven ... or at least the safest haven. I am waiting for matress.com to open.

[phirang]

Re: Signs of 2009 Dollar Devaluation and Crashing Bonds?

these "crisis" prices let the Fed very cheaply twist the long end.