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Treasury bill yields dropped to a 14-week low.

The Treasury sold $4.5 billion in new three-month bills at an average discount rate of 6.81%, down from 7.17% last week. Another $4.5 billion was sold in new six-month bills at an average discount rate of 7.05%, down from 7.32% last week. The rates were the lowest since three-month bills sold for 6.73% on June 17 and six-month bills sold for 7% on July 8. The new discount rates understate the actual return to investors--7.02% for three-month bills and 7.41% for six-month bills. The discount rate reflects the price discount received when government securities are purchased at less than face value. While the government normally sells $14.4 billion at its weekly bill auction, the amount was reduced to $9 billion because congressional action is still needed to raise the national debt limit.


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