Interest rate on 6-month Treasury bills at highest level since April, 3-month bills unchanged
By APMonday, June 29, 2009
Treasury bill rates mixed at weekly auction
WASHINGTON — Interest rates on short-term Treasury bills were mixed in Monday’s auction. Rates on six-month bills rose to the highest level since mid-April, while three-month bills were unchanged.
The Treasury Department auctioned $30 billion in six-month bills at a discount rate of 0.350 percent, up from 0.335 percent last week. Another $32 billion in three-month bills were auctioned at a discount rate of 0.195 percent.
The three-month rate for the past two weeks has been at the highest level since those bills averaged 0.200 percent on April 6. The six-month rate was the highest since those bills averaged 0.370 percent on April 13.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,995.07, while a six-month bill sold for $9,982.31. That would equal an annualized rate of 0.198 percent for the three-month bills, and 0.355 percent for the six-month bills.
Rates on three- and six-month bills have been moving in a narrow band below 1 percent for many months, reflecting that the Federal Reserve has driven its target for the federal funds rate, a key short-term rate, to a record low.
The Fed met last week kept the funds rate between zero and 0.25 percent, where it has been since last December, and reaffirmed that it planned to keep rates low for “an extended period.” Many economists believe the Fed will not begin raising rates until next year.
Separately, the Fed said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 0.44 percent last week from 0.48 percent the previous week.
