WASHINGTON - Interest rates on short-term Treasury bills rose in yesterday’s auction to the highest levels in three weeks.
The Treasury Department auctioned $32 billion in three-month bills at a discount rate of 0.190 percent, up from 0.180 percent last week. Another $31 billion in six-month bills was auctioned at a discount rate of 0.285 percent, up from 0.270 percent last week.
The rates were the highest since June 29, when the three-month rate averaged 0.195 percent and the six-month rate averaged .350 percent.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,995.20, while a six-month bill sold for $9,985.59. That would equal an annualized rate of 0.193 percent for the three-month bills, and 0.289 percent for the six-month bills.
Rates on three- and six-month bills have been moving in a narrow band below 1 percent for many months, reflecting that the Federal Reserve has driven its target for the federal funds rate, a key short-term rate, to a record low between zero and 0.25 percent. Many economists believe the Fed will not begin raising rates until next year.
Separately, the Fed said yesterday the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, remained steady at 0.45 percent last week.