Rates fall at weekly Treasury auction

[October 12, 2011]  WASHINGTON (AP) -- Interest rates on short-term Treasury bills fell in Tuesday's auction with rates on three-month bills falling to the lowest level in three weeks.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.015 percent, down from 0.020 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.045 percent, down from 0.060 percent last week.

The three-month rate was the lowest since three-month bills averaged 0.010 percent three weeks ago on Sept. 19. The six-month rate was the lowest since these bills averaged 0.035 percent two weeks ago on Sept. 26.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.62 while a six-month bill sold for $9,997.73. That would equal an annualized rate of 0.015 percent for the three-month bills and 0.046 percent for the six-month bills.

Separately, the Federal Reserve said Tuesday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, was unchanged at 0.11 percent last week, the same as the previous week.

The weekly Treasury auction, normally held on Monday, was held on Tuesday this week because of the federal holiday for Columbus Day.

[Associated Press]

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