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Treasury bills edge up slightly in weekly auction

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[January 18, 2012]  WASHINGTON (AP) -- Interest rates on short-term Treasury bills rose modestly in Tuesday's auction but remained close to record lows.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.025 percent, up from 0.01 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.06 percent, up from 0.05 percent last week.

The three-month and six-month rates were the highest since Nov. 28, when three-month bills averaged 0.03 percent the six-month rate was 0.07 percent. Even with the modest increases, the rates are still hovering close to all-time lows first set on Nov. 7 of 0.005 percent for three-month bills and 0.035 percent for six-month bills.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.37 while a six-month bill sold for $9,996.97. That would equal an annualized rate of 0.025 percent for the three-month bills and 0.061 percent for the six-month bills.

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The weekly Treasury auction was held on Tuesday rather than Monday because of the Martin Luther King holiday.

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, edged down to 0.11 percent last week from 0.12 percent the previous week.

[Associated Press]

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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