Rates on US Treasury bills rise at weekly auction

WASHINGTON – Interest rates on short-term Treasury bills rose for a second straight week in Monday’s auction, reaching their highest level since May 31, as global economic worries eased.

The Treasury Department auctioned $37 billion in three-month bills at a discount rate of 0.320 per cent, up from 0.310 per cent last week. Another $32 billion in six-month bills was auctioned at a discount rate of 0.430 per cent, up from 0.390 per cent last week.

The increases followed several weeks marked by economic anxiety, amplified by Britain’s surprise vote to leave the European Union. That spurred investors 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 0.475 per cent on the same day.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,991.91, while a six-month bill sold for $9,978.26. That would equal an annualized rate of 0.325 per cent for the three-month bills and 0.437 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, jumped to 0.52 per cent last week from 0.46 per cent the previous week.