Rates on Treasury bills mixed at weekly auction

[October 04, 2011]  WASHINGTON (AP) -- Interest rates on short-term Treasury bills were mixed in Monday's auction with rates on three-year bills unchanged near the lowest level since late 2008, while rates on six-month bills edged up slightly to the highest level in a month.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.020 percent, unchanged from last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.060 percent, up from 0.035 percent last week.

The three-month rate at 0.020 percent for the past two weeks compared to 0.010 percent three weeks ago, a rate which was the lowest since these bills averaged 0.010 percent three weeks ago. That rate had been the lowest since 0.005 percent on Dec. 8, 2008, during the financial crisis. Then, like now, investors were seeking the safety of U.S. Treasury debt.

The six-month rate this week was the highest since these bills averaged 0.070 percent the week of Sept. 6.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.49 while a six-month bill sold for $9,996.97. That would equal an annualized rate of 0.020 percent for the three-month bills and 0.061 percent for the six-month bills.

Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, edged up to 0.11 percent last week from 0.10 percent the previous week.

[Associated Press]

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