6-month T bills fall to a record low

Associated Press / May 10, 2011

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WASHINGTON — Interest rates on short-term Treasury bills fell in yesterday’s auction, with rates on three-month bills declining to the lowest point since the 2008 financial crisis and rates on six-month bills dropping to a record low.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.025 percent, down from 0.050 percent last week. Another $27 billion was auctioned in six-month bills at a discount rate of 0.065 percent, down from 0.100 percent last week.

The three-month rate was the lowest since these bills averaged 0.005 percent on Dec. 8, 2008, during the financial crisis. The six-month rate represented a record low.

The discount rate reflects that the bills sell for less than face value. For a $10,000 bill, the three month price was $9,999.37, while a six-month bill sold for $9,996.71. That would equal an annualized rate of 0.025 percent for the three-month bills and 0.066 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, fell to 0.20 percent last week, down from 0.22 percent the previous week.