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Rates rise at weekly US Treasury auction

WASHINGTON – Interest rates on short-term Treasury bills rose in Tuesday’s auction, with three-month bills rising to their highest level in four weeks.

The Treasury Department auctioned $42 billion in three-month bills at a discount rate of 0.360 per cent, up from 0.310 per cent last week. Another $36 billion in six-month bills was auctioned at a discount rate of 0.495 per cent, up from 0.490 per cent last week.

The three-month rate was the highest since three-month bills averaged 0.375 per cent four weeks ago on Sept. 12. The six-month rate was the highest since those bills averaged 0.500 per cent on Sept. 19.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,990.90, while a six-month bill sold for $9,974.98. That would equal an annualized rate of 0.365 per cent for the three-month bills and 0.503 per cent for the six-month bills.

The weekly auction, normally held on Monday, was held Tuesday this week because of the Columbus Day holiday.

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, stood at 0.63 per cent at the beginning of last week on Monday, Oct. 3, and rose to 0.66 per cent at the end of last week on Friday, Oct. 7.