6-month T-bill rate falls to record low

Associated Press / April 5, 2011

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WASHINGTON — Interest rates on short-term Treasury bills fell in yesterday’s auction with rates on six-month bills hitting a record low.

The Treasury Department auctioned $32 billion in three-month bills at a discount rate of 0.050 percent, down from 0.100 percent last week. Another $30 billion was auctioned in six-month bills at a discount rate of 0.130 percent, down from 0.170 percent last week.

The three-month rate was the lowest since these bills averaged 0.040 percent on Jan. 11, 2010. The rate on six-month bills was the lowest on record. Both the three-month and six-month bills have been hovering near historic lows since the Federal Reserve reduced a key short-term interest rate more than two years ago to a record low in an effort to give the economy a boost.

The discount rate reflects that the Treasury bills sell for less than face value.

For a $10,000 bill, the three-month price was $9,998.74 while a six-month bill sold for $9,993.43. That would equal an annualized rate of 0.051 percent for the three-month bills and 0.132 percent for the six-month bills.

Separately, the Fed said yesterday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, edged up slightly to 0.30 percent last week from 0.26 percent the previous week.