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T-bills drop to 4-year lows

Associated Press / September 16, 2008
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WASHINGTON - Interest rates on short-term Treasury bills fell in auction yesterday with rates on three-month bills dropping to their lowest level in four years.

The Treasury Department auctioned $28 billion in three-month bills at a discount rate of 1.050 percent, down from 1.690 percent last week.

Another $27 billion in six-month bills was auctioned at a discount rate of 1.550 percent, down from 1.900 percent last week.

The three-month rate was the lowest since the bills averaged 1.040 percent on May 17, 2004. The six-month rate was the lowest since 1.380 percent on April 14.

The discount rates reflect the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,973.46 while a six-month bill sold for $9,921.64. That would equal an annualized rate of 1.067 percent for the three-month bills and 1.584 percent for the six-month bills.

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 2.05 percent last week from 2.08 percent the previous week.

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