Thursday, October 11, 2007

Credit woes push CDs farther off Treasuries

Markets are giving us a good estimate of the cost of borrowing for CD issuers.

As the chart below shows, CD rates are relatively constant over the past year or so, while yields US Treasuries have fallen substantially.



Spreads have widened to more than 150 basis points in the past few months as investors have bid up Treasuries.

The question investors will now be asking is "Will the spread continue to widen?"