Rates on US Treasury bills drop at weekly auction to lowest levels since early 2012

WASHINGTON – 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 per cent, down from 0.050 per cent last week. Another $24 billion in six-month bills was auctioned at a discount rate of 0.76 per cent, down from 0.80 per cent last week.

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

The discount rates reflect 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 per cent for the three-month bills and 0.076 per cent 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 per cent last week from 0.12 per cent the previous week.