Short-Term T-Bill Rates Hit a Low

Interest rates on short-term Treasury securities fell in Monday’s auction to the lowest level in 20 years.

The Treasury Department sold $11.4 billion in three-month bills at an average discount rate of 3.60%, down from 3.95% last week. Another $11.4 billion was sold in six-month bills at an average discount rate of 3.73%, down from 4.02% last week.

The three-month bill rate was the lowest since they sold for 3.46% on May 8, 1972. The six-month bill rate was the lowest since they averaged 3.51% on Feb. 18, 1972.

The new discount rates understate the actual return to investors--3.68% for three-month bills, with a $10,000 bill selling for $9,909, and 3.86% for a six-month bill selling for $9,811.40.

In a separate report, the Federal Reserve said Monday that the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, fell to 4.25% last week, down from 4.50% the previous week.

T-Bill Auction 6-month: 3.73% 3-month: 3.60%