While certificate of deposit investors nervously watched CD rates hang tight in the first three days of this week, they can take some solace that sunnier days – and higher rates – could be just around the bend.

Why? A fresh set of economic data is backing the sentiment that the recession is over, inflation may become a looming threat that could trigger a rate hike from the Federal Reserve, and that consumer confidence – a key platform for any economic rebound – is on the way up.

For the first three days of the week, five-year certificates of deposit, are flirting once again with the 2.3% barrier (albeit barely) at 2.28%, while four-year CDs fell to 1.99% from 2.05%. Down the ladder, two-year CDs rose to 1.53% from 1.52%, while one-year CDs remained fairly stable, falling slightly to 1.07% from 1.08%.

At the lower end, three-month CDs are treading water, declining slightly to 0.48% from 0.5%, while six-month CDs fell a peg to 0.73% from 0.74%.

All rates were measured by BankingMyWay’s National CD Rate Tracker, as of Sept. 14.

Even with the incremental falloff for the first few days of this week, current CD rates continue to represent the highest increase, on average, for CD rates in months, although that’s not saying much considering the lousy performance demonstrated by shorter-term fixed-income rates overall.

Check it out. At around 1%, one-year CD rates are at their lowest levels since 1983. It’s the same for three-month CDs, which are at 20-year lows. Five-year CDs are hovering around their lowest levels since 1984 – when Ronald Reagan was president, Apple Computer unveiled a brand new model called the Macintosh and a 25-year-old Michael Jackson was moon-dancing across concert stages all over America.

So are CDs finally out of the doldrums, and are the past 10 days a big neon sign that they’re rising from the ashes?

The powers that be claim to think so. Federal Reserve Chairman Ben Bernanke came out earlier this week to say that the recession is “very likely over.” Wall Street has been a step ahead of the Fed on this issue, pricing in a big rebound six months ago, a big reason why the Dow Jones Industrial Average rose 54% in value from March 9 to Sept. 11 this year.

CD buyers might also take encouragement from some more good news that rolled out earlier this week. The Commerce Department reported on Sept. 15 that total retail sales climbed 2.7% last month, significantly up from July's revised decline of 0.2%. Economists surveyed by Briefing.com had predicted that August sales would rise by 2%.

The cloud over consumer confidence seems to be lifting, too. According to the Reuters/University of Michigan consumer sentiment index, consumer confidence rose to 70.2 this month from 65.7 in August. That’s up from the 67.5 index pegged by a Bloomberg survey of economists.

Taken together, the tapestry woven from this week’s financial news is a bright one, and could understandably fuel encouragement from CD investors.

But what about the banks themselves? Is there cause for optimism there, too?

Maybe so. Some of the larger banks are wading back into the market with some decent yield deals. That’s a natural occurrence in the first two weeks of September, when bank marketing dollars shift into a higher gear. Take Citicorp (Stock Quote: C). Earlier this month, Citicorp rolled out a five-year CD with a highly competitive rate of 3.5%.

Bigger banks, which happily accepted government bailout money this spring, only to keep the hammer down on deposit rates, can significantly move markets when they step in and raise deposit rates. If Citi raises its five-year CD rates, other banks will have to scramble to keep up, which results in a good deal for investors.

Such a trend could move the CD markets upward, but only temporarily, and only if the bigger banks continue to play ball. The bigger concern, of course, is the U.S. economy, which stubbornly refuses to deliver any earth-shaking news to cautious investors. Until we see more movement on the economy (specifically, better employment numbers and higher consumer spending), uncertainty is the law of the financial land.

Wall Street hates uncertainty, so until things clear up, let’s hope that banks begin a nice run of competition over who can offer the highest CD rates. To that end, the first half of this week, on top of a positive pace last week, should come as welcome news to CD investors.

But don’t take anything for granted. You’ll likely get your best CD rates by visiting BankingMyWay to see if you can’t dig up any good deals from larger banks.

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