Rates fall at weekly Treasury auction

AP News
Posted: May 02, 2011 7:13 PM
Rates fall at weekly Treasury auction

Interest rates on short-term Treasury bills fell in Monday's auction, with rates on six-month bills setting a new record low.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.050 percent, down from 0.065 percent last week. Another $27 billion was auctioned in six-month bills at a discount rate of 0.100 percent, down from 0.115 percent last week.

The three-month rate was the lowest since three-month bills averaged 0.040 percent on Jan. 11, 2010. The six-month rate fell to an all-time low.

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 $9,994.94. That would equal an annualized rate of 0.051 percent for the three-month bills and 0.102 percent for the six-month bills.

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, fell to 0.22 percent last week, down from 0.24 percent the previous week.