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Short-term T-bills see rates drop

WASHINGTON - Interest rates on short-term Treasury bills fell in auction yesterday with six-month bills falling to the lowest level since late August.

The Treasury Department auctioned $18 billion in three-month bills at a discount rate of 3.900 percent, down from 4.185 percent last week. Another $16 billion in six-month bills was auctioned at a discount rate of 3.990 percent, down from 4.225 percent last week.

The three-month rate was the lowest since these bills averaged 3.840 percent on Oct. 1. The six-month rate was the lowest since it averaged 3.950 percent on Aug. 20.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,901.42 while a six-month bill sold for $9,798.28.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 4.14 percent last week, down from 4.24 percent the previous week.

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