Short-term Treasury rates dip further
WASHINGTON - Short-term Treasury bill rates edged down slightly in yesterday's auction and are expected to remain at low levels until the Federal Reserve starts raising interest rates.
That means businesses, money market mutual funds, and other investors who use short-term Treasury bills as a convenient and safe place to park their money will not be getting much of a return.
The Treasury Department auctioned $31 billion in three-month bills at a discount rate of 0.185 percent, down from 0.190 percent last week.
Another $29 billion in six-month bills was auctioned at a discount rate of 0.295 percent, down from 0.305 percent last week.
The three-month rate was the lowest since three-month bills averaged 0.135 percent on April 27. The six-month rate was the lowest since 0.290 percent on Jan. 12.
The three- and six-month bills have been trading well below 1 percent for most of the year.
Economists believe they will remain at low levels for at least another year, until the Fed believes the economy has gained enough traction that it needs to start raising interest rates.
In yesterday's auction, the three-month price for a $10,000 bill was $9,995.24, while a six-month bill sold for $9,985.09. That would equal an annualized rate of 0.188 percent for the three-month bills, and 0.300 percent for the six-month bills.
Separately, the Fed said yesterday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 0.52 percent last week from 0.53 percent the previous week.