T-bill rates fall to a two-week low

Associated Press / January 5, 2010

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WASHINGTON - Interest rates on short-term Treasury bills fell in yesterday’s auction to the lowest levels in two weeks.

The Treasury Department auctioned $25 billion in three-month bills at a discount rate of 0.080 percent, down from 0.110 percent last week. Another $26 billion in six-month bills was auctioned at a discount rate of 0.180 percent, down from 0.200 percent.

The three-month rate was the lowest since three-month bills averaged 0.070 percent on Dec. 21. The six-month rate was the lowest since 0.170 percent, also on Dec. 21.

Rates on three- and six-month bills have been at historic lows for more than a year, reflecting the Federal Reserve’s efforts to keep interest rates low to strengthen the economy.

The discount rates reflect that the Treasury bills sell for less than face value. For a $10,000 bill, the three-month price was $9,997.98 while a six-month bill sold for $9,990.90. That would equal an annualized rate of 0.081 percent for the three-month bills and 0.183 percent for the six-month bills.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 0.47 percent last week from 0.41 percent the previous week.