It appears that banks offering fixed income investments are preparing for a period of declining interest rates.

Beginning in June 2004, short-term interest rates began to rise.  Buoyed by the Fed Funds Rate, interest rates for fixed income securities such as Certificates of Deposit began to rise, too. 

For example, in November 2005, the highest yielding 12-month CD at Fidelity Investments was at 4.40%.  By November 2005, it was up to 5.20%.

It appears the upward trend is over, however.

A look at today's CDs on Fidelity's Web site shows the following yields over specific periods of time:

• 3-Month: 5.20%
• 6-Month: 5.15%
• 9-Month: 5.15%
• 12-Month: 5.10%

In other words, banks feel that interest rates will decline over the next 12 months and they certainly don't want to be paying you any more interest than they have to.  And remember -- CDs are guaranteed because they are FDIC-insured.  This is as risk-free as you can get with an investment.

This is simple research that you can do on your own, too.  Just open up your local daily and take notice of how many advertisements you find for CDs.  You'll see the trend, too!

The longer the term on the CD, the lower the offered rate will be.  This is because banks and businesses expect the U.S. economy to slow down in 2007.

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Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.