Rates on Treasury bills drop at weekly auction

[December 06, 2011]  WASHINGTON (AP) -- Interest rates on short-term Treasury bills fell in Monday's auction with rates on three-month bills matching a record low.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.005 percent, down from 0.03 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.05 percent, down from 0.07 percent last week.

The three-month rate matched a record low set on Nov. 7. Even with the small rise for the six-month bill, it remained close to its record low of 0.035 percent, also set on Nov. 7. The six-month rate was the lowest since it stood at 0.04 percent on Nov. 17.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.87 while a six-month bill sold for $9,997.47. That would equal an annualized rate of 0.005 percent for the three-month bills and 0.051 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 0.13 percent last week from 0.12 percent the previous week.

[Associated Press]

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