Rates on 3- and 6-Month T-Bills at 7-Year Low

Interest rates on short-term Treasury securities fell in Monday’s auction to their lowest point in seven years, in the wake of last week’s Federal Reserve interest-rate cut and as some investors sought refuge from the stock market. The Treasury sold $9 billion in three-month bills at a discount rate of 3.655%, down from 4.05% last week. An additional $8 billion was sold in six-month bills at a rate of 3.665%, down from 4.06%. The new discount rates understate the actual return to investors--3.741% for three-month bills, with a $10,000 bill selling for $9,907.60, and 3.786% for a six-month bill selling for $9,814.70. In a separate report, the Fed said the average yield for one-year constant maturity T-bills, the most popular index for making changes in adjustable-rate mortgages, fell to 4.04% last week from 4.07% the previous week.