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Half-year T-bills at a 14-month low

Associated Press / March 15, 2011

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WASHINGTON — Interest rates on short-term Treasury bills fell in yesterday’s auction, with rates on six-month bills falling to their lowest in 14 months.

The Treasury Department auctioned $32 billion in three-month bills at a discount rate of 0.090 percent, down from 0.110 percent last week. Another $30 billion in six-month bills was auctioned at a discount rate of 0.135 percent, down from 0.155 percent.

The three-month rate was the lowest since three-month bills averaged 0.065 percent on June 14. The six-month rate was the lowest since these bills averaged 0.130 percent on Jan. 11, 2010.

The discount rates reflect that the bills sell for less than face value.

For a $10,000 bill, the three-month price was $9,997.72 while a six-month bill sold for $9,993.18. That would equal an annualized rate of 0.092 percent for the three-month bills and 0.137 percent for the six-month bills.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 0.25 percent last week from 0.26 percent the previous week.