WASHINGTON - Interest rates on short-term Treasury bills fell in yesterday's auction with rates on six-month bills dropping to the lowest level in more than two years.
The Treasury Department auctioned $20 billion in three-month bills at a discount rate of 3.550 percent, down from 3.920 percent last week. Another $18 billion in six-month bills was auctioned at a discount rate of 3.780 percent, down from 3.945 percent last week.
The three-month rate was the lowest since three-month bills averaged 2.850 percent on Aug. 20. The six-month rate was the lowest since these bills averaged 3.745 percent on Sept. 26, 2005.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,910.26 while a six-month bill sold for $9,808.90.
Separately, the Federal Reserve said yesterday the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 3.93 percent last week from 3.97 percent the previous week.