Short-Term T-Bill Rates Fall Again

Interest rates on short-term Treasury securities fell in auction to the lowest level in more than four years. The Treasury Department sold $8 billion in three-month bills at an average discount rate of 4.16%, down from 4.43% last week. It also sold $8 billion in six-month bills at an average rate of 4.19%, down from 4.46%. The three-month rate was the lowest since June 6, 1994, when the bills sold for 4.15%. The six-month rate was the lowest since April 11, 1994, when the average was 4.03%. The new discount rates understate the actual return to investors: 4.26% for three-month bills, with a $10,000 bill selling for $9,895.00, and 4.34% for a six-month bill selling for $9,788.40. The government will auction nine-year, three-month inflation-indexed notes on Oct. 15, and will auction two-year notes on Oct. 28. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 4.41% last week from 4.61% the previous week.