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 2.5 years.
The Treasury Department auctioned $19 billion in three-month bills at a discount rate of 3.18 percent, down from 3.31 percent last week.
Another $18 billion in six-month bills was auctioned at a discount rate of 3.17 percent, down from 3.39 percent last week.
The three-month rate was the lowest since these bills averaged 3.000 percent on Dec. 17. The six-month rate was the lowest since 3.12 percent on June 13, 2005.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,919.62 while a six-month bill sold for $9,839.74.
Separately, the Federal Reserve said yesterday that the average yield for one-year Treasury bills, a popular index for changing adjustable rate mortgages, fell to 3.18 percent last week.