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Short-term T-bill rates fall; 1-year yield edges up

WASHINGTON -- Interest rates on short-term Treasury bills fell in yesterday's auction with three-month bills dropping to the lowest level in nearly three months.

The Treasury Department auctioned $20 billion in three-month bills at a discount rate of 4.930 percent, down from 4.965 percent last week. Another $16 billion in six-month bills was auctioned at a discount rate of 4.910 percent, down from 4.920 percent last week.

The three-month rate was the lowest since these bills averaged 4.875 percent on Dec. 26 of last year. The six-month rate was the lowest since these bills brought 4.855 percent two weeks ago.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,875.38 while a six-month bill sold for $9,751.77.

Separately, the Federal Reserve said yesterday the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, edged up slightly to 4.93 percent last week, compared to 4.92 percent the previous week.

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