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Rates on short-term bills jump in Treasury auction

WASHINGTON – Interest rates on short-term Treasury bills rose in Monday’s auction with rates on six-month bills jumping to their highest level since the end of May.

The Treasury Department auctioned $40 billion in three-month bills at a discount rate of 0.305 per cent, up from 0.285 per cent last week. Another $34 billion in six-month bills was auctioned at a discount rate of 0.440 per cent, up from 0.395 per cent last week.

The three-month rate was the highest since those bills averaged 0.320 per cent on July 25. The six-month rate was the highest since those bills averaged 0.475 per cent on May 31.

The discount rates in Monday’s auction reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,992.30, while a six-month bill sold for $9,977.76. That would equal an annualized rate of 0.309 per cent for the three-month bills and 0.447 per cent 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 0.52 per cent last week from 0.53 per cent the previous week.