Interest rates drop at weekly Treasury auction

AP News
Posted: Dec 19, 2011 6:19 PM
Interest rates drop at weekly Treasury auction

Interest rates on short-term Treasury bills fell in Monday's auction with rates on three-month bills matching a record low.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.005 percent, down from 0.01 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.04 percent, down from 0.045 percent last week.

The three-month rate matched a record low set Nov. 7. The six-month rate was the lowest since these bills were at 0.035 percent, also on Nov. 7.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.87 while a six-month bill sold for $9,997.98. That would equal an annualized rate of 0.005 percent for the three-month bills and 0.041 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 0.11 percent last week.