Rates on US Treasury bills drop at weekly auction

WASHINGTON – Interest rates on short-term Treasury bills fell in Monday’s auction with rates on six-month bills dropping to their lowest level in five months.

The Treasury Department auctioned $28 billion in three-month bills at a discount rate of 0.230 per cent, down from 0.235 per cent last week. Another $24 billion in six-month bills was auctioned at a discount rate of 0.350 per cent, down from 0.385 per cent last week.

The three-month rate was the lowest since those bills averaged 0.215 per cent on Jan. 11. The six-month rate was the lowest since those bills averaged 0.330 per cent five months ago on Nov. 16.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,994.19, while a six-month bill sold for $9,982.31. That would equal an annualized rate of 0.233 per cent for the three-month bills and 0.355 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, fell to 0.55 per cent last week from 0.62 per cent the previous week.