Rates for Short-Term T-Bills Hit 4-Year Low

Interest rates on short-term Treasury securities fell 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 4.43%, down from 4.64% last week. In addition, $8 billion was sold in six-month bills at an average rate of 4.46%, down from 4.62%. The three-month rate was the lowest since Aug. 1, 1994, when the bills sold for 4.35%. The six-month rate was the lowest since May 2, 1994, when the average was 4.41%. The new discount rates understate the actual return to investors--4.54% for three-month bills, with a $10,000 bill selling for $9,888.00, and 4.62% for a six-month bill selling for $9,774.80. The next auction of two-year notes will be Oct. 28. 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, fell to 4.61% last week from 4.76% the week before.