T-Bill Rates Drop to Lowest Level in 3 Weeks

Interest rates on short-term Treasury securities declined in auction to their lowest level in three weeks. The Treasury Department sold $6.5 billion in three-month bills at an average discount rate of 5.14%, down from 5.18% last week. An additional $6.5 billion was sold in six-month bills at an average rate of 5.30%, down from 5.31%. The rates were the lowest since March 17, when three-month bills sold for 5.13% and the six-month rate averaged 5.26%. The new discount rates understate the actual return to investors: 5.28% for three-month bills, with a $10,000 bill selling for $9,870.10, and 5.52% for a six-month bill selling for $9,732.10. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, rose to 5.99% last week from 5.94% the previous week.