WASHINGTON -- Interest rates on short-term Treasury bills fell in auction yesterday, with rates on three-month bills sliding to the lowest level in more than two years.
The Treasury Department auctioned $21 billion in three-month bills at a discount rate of 2.850 percent, down from 4.630 percent last week. Another $17 billion in six-month bills was auctioned at a discount rate of 3.950 percent, down from 4.710 percent last week.
The three-month rate was the lowest since three-month bills averaged 2.800 percent on May 16, 2005.
The six-month rate was the lowest since these bills averaged 3.870 percent on Oct. 3, 2005.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,927.17 while a six-month bill sold for $9,800.31.
Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 4.44 percent last week, down from 4.78 percent the previous week.