Rates fall at weekly Treasury auction

[October 02, 2012]  WASHINGTON (AP) -- Interest rates on short-term Treasury bills fell in Monday's auction with rates on three-month bills dropping to the lowest level since early June.

The Treasury Department auctioned $32 billion in three-month bills at a discount rate of 0.085 percent, down from 0.110 percent last week. Another $28 billion in six-month bills was auctioned at a discount rate of 0.135 percent, down from 0.140 percent last week.

The three-month rate was the lowest since those bills averaged 0.075 percent on June 4. The six-month rate was the lowest since those bills averaged 0.130 percent on Sept. 17.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,997.85 while a six-month bill sold for $9,993.18. That would equal an annualized rate of 0.086 percent for the three-month bills and 0.137 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 down to 0.17 percent last week from 0.18 percent the previous week.

[Associated Press]

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