Short-term Treasury rates mixed at weekly auction

AP News
Posted: Dec 07, 2009 5:04 PM

Interest rates on short-term Treasury bills were mixed in Monday's auction. Rates on three-month bills dropped to the lowest level in two weeks, while rates on six-month bills rose to the highest level since early November.

The Treasury Department auctioned $30 billion in three-month bills at a discount rate of 0.050 percent, down from 0.060 percent last week. Another $31 billion in six-month bills was auctioned at a discount rate of 0.165 percent, up from 0.150 percent last week.

The three-month rate was the lowest since these bills averaged 0.040 percent on Nov. 23. The six-month rate was the highest since 0.170 percent on Nov. 2.

Rates on short-term Treasury securities have been near historic lows for months, reflecting the Federal Reserve's efforts to keep interest rates low to strengthen the struggling economy. Federal Reserve Chairman Ben Bernanke on Monday repeated his pledge to keep rates low for an extended period to give the economy time to recover.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,998.74, while a six-month bill sold for $9,991.66. That would equal an annualized rate of 0.051 percent for the three-month bills, and 0.167 percent for the six-month bills.

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Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 0.29 percent last week from 0.27 percent the previous week.