Rates on US Treasury Bills Drop at Weekly Auction

Interest rates on short-term Treasury bills fell in Monday’s auction to the lowest levels since January 2012.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.040 percent, down from 0.050 percent last week. Another $24 billion in six-month bills was auctioned at a discount rate of 0.76 percent, down from 0.80 percent last week.

The three-month rate was the lowest since three-month bills averaged 0.025 percent on Jan. 17, 2012. The six-month rate was the lowest since these bills averaged 0.070 percent on Jan. 23, 2012.

The discount rates reflect the fact that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,998.99, while a six-month bill sold for $9,996.21. That would equal an annualized rate of 0.041 percent for the three-month bills and 0.076 percent for the six-month bills.

Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, edged down to 0.11 percent last week from 0.12 percent the previous week.