Rates increased at weekly Treasury auction

AP News
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Posted: Sep 06, 2011 4:44 PM
Rates increased at weekly Treasury auction

Interest rates on short-term Treasury bills rose slightly in Tuesday's auction but still remained near historic lows.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.030 percent, up from 0.015 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.070 percent, up from 0.045 percent last week.

The three-month rate was the highest since three-month bills averaged 0.035 percent on Aug. 15. The six-month rate was the highest since those bills averaged 0.080 percent, also on Aug. 15.

Even with the small increases, the rates on the three-month and six-month bills remain near all-time lows. Rates on Treasury securities have remained at low levels in recent weeks even after credit rating agency Standard & Poor's lowered its rating on long-term Treasury debt one notch to AA+ on Aug. 5.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.24 while a six-month bill sold for $9,996.46. That would equal an annualized rate of 0.031 percent for the three-month bills and 0.071 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, was unchanged at 0.10 percent last week, the same as the previous week.