US Treasury rates rise with 3-month bills hitting highest level in more than 2 years

WASHINGTON – Interest rates on short-term Treasury bills rose in Tuesday’s auction, with three-month bills reaching the highest level in more than two years.

The Treasury Department auctioned $35 billion in three-month bills at a discount rate of 0.130 per cent, up from 0.035 per cent last week. Another $30 billion in six-month bills was auctioned at a discount rate of 0.150 per cent, up from 0.060 per cent.

The three-month rate was the highest since three-month bills averaged 0.145 per cent on Feb. 28, 2011. The six-month rate was the highest since those bills averaged 0.160 per cent on Oct. 29, 2012.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,996.71 while a six-month bill sold for $9,992.41. That would equal an annualized rate of 0.132 per cent for the three-month bills and 0.152 per cent for the six-month bills.

The weekly auction of three-month and six-month Treasury bills is normally held on Monday but took place on Tuesday this week because of the Columbus Day 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, rose to 0.13 per cent last week from 0.11 per cent the previous week.