Rates on short-term Treasury bills rise at auction
Interest rates on 3-month, 6-month Treasury bills rise to highest levels since late June
By Daniel Wagner, AP Business Writer
On Monday July 20, 2009, 5:19 pm EDT
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WASHINGTON (AP) -- Interest rates on short-term Treasury bills rose in Monday's auction to the highest levels in three weeks.
The Treasury Department auctioned $32 billion in three-month bills at a discount rate of 0.190 percent, up from 0.180 percent last week. Another $31 billion in six-month bills was auctioned at a discount rate of 0.285 percent, up from 0.270 percent last week.
The rates were the highest since June 29, when the three-month rate averaged 0.195 percent and the six-month rate averaged .350 percent.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,995.20, while a six-month bill sold for $9,985.59. That would equal an annualized rate of 0.193 percent for the three-month bills, and 0.289 percent for the six-month bills.
Rates on three- and six-month bills have been moving in a narrow band below 1 percent for many months, reflecting that the Federal Reserve has driven its target for the federal funds rate, a key short-term rate, to a record low between zero and 0.25 percent. Many economists believe the Fed will not begin raising rates until next year.
Separately, the Fed said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, remained steady at 0.45 percent last week.
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