3- and 6-month T-bill rates drop to 6-week lows

WASHINGTON -- Interest rates on short-term Treasury bills fell in yesterday's auction to the lowest levels since early October.

The Treasury Department auctioned $18 billion in three-month bills at a discount rate of 4.905 percent, down from 4.940 percent last week.

Another $16 billion in six-month bills was auctioned at a discount rate of 4.935 percent, down from 4.940 percent last week.

The three-month rate was the lowest since the discount rate was 4.850 percent on Oct. 10. The six-month rate was the lowest since 4.890 percent, also on Oct. 10.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,876.01 while a six-month bill sold for $9,750.51.

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 5.01 percent last week from 5.03 percent the previous week.