Rates on US Treasury bills rise at weekly auction

WASHINGTON – Interest rates on short-term Treasury bills rose in Monday’s auction following steep declines in recent weeks.

The Treasury Department auctioned $37 billion in three-month bills at a discount rate of 0.310 per cent, up from 0.270 per cent last week. Another $32 billion in six-month bills was auctioned at a discount rate of 0.390 per cent, up from 0.340 per cent last week.

Uncertainty about the global economy, amplified by Britain’s surprise vote to leave the European Union, had spurred investors in recent weeks to embrace the relative safety of U.S. government debt — driving up the bonds’ prices and slashing their yields to record lows.

The rate on three-month bills at Monday’s auction was the highest since those bills averaged 0.340 per cent on May 31. The six-month rate was the highest since those bills averaged 0.400 per cent on June 20.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,992.16, while a six-month bill sold for $9,980.28. That would equal an annualized rate of 0.315 per cent for the three-month bills and 0.396 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 up to 0.46 per cent last week from 0.45 per cent the previous week.