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Short-term Treasury bill rates mixed

Associated Press / May 27, 2009
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WASHINGTON - Interest rates on short-term Treasury bills were mixed in yesterday's auction, but remained well below 1 percent.

The Treasury Department auctioned $31 billion in three-month bills at a discount rate of 0.175 percent, down from 0.185 percent last week.

Another $30 billion in six-month bills was auctioned at a discount rate of 0.300 percent, up from 0.295 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 highest since 0.305 percent on May 11.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,995.58, while a six-month bill sold for $9,984.75.

That would equal an annualized rate of 0.178 percent for the three-month bills, and 0.305 percent for the six-month bills.

In a second auction yesterday, Treasury sold $40 billion in two-year notes at a discount rate of 0.940 percent.

That was down from 0.949 percent at the last two-year note auction on April 27, and the lowest rate since 0.925 percent on Jan. 27.

Interest rates on Treasury debt have remained near historic lows as investors flock to the safety of Treasury securities amid turbulence in financial markets.

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 0.47 percent last week from 0.52 percent the previous week.

Treasury normally holds its weekly auction of short-term bills on Monday, but this week's sale was delayed because of the Memorial Day holiday.