Rate on 3-month bill falls to lowest since Dec '08

AP News
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Posted: Jun 27, 2011 7:33 PM
Rate on 3-month bill falls to lowest since Dec '08

Interest rates on three-month Treasury bills fell in Monday's weekly auction to the lowest level in two and a half years.

The Treasury Department auctioned $27 billion in three-month bills at a discount rate of 0.025 percent, down from 0.035 percent last week. That was the lowest three-month rate since these bills averaged 0.005 percent on Dec. 11, 2008. That was during the height of the financial crisis, when investors took refuge in Treasury bills, driving down their yields.

Another $24 billion in six-month bills was auctioned at a discount rate of 0.095 percent, down from 0.1 percent last week. The six-month rate was the lowest since those bills averaged 0.070 percent on May 16.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.37 while the six-month bill sold for $9,995.20. That would equal an annualized rate of 0.025 percent for the three-month bills and 0.097 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, ticked up to 0.19 percent from 0.18 percent in the previous week.