Interest Rates Mixed on Treasury Bills

Interest rates on short-term Treasury bills were mixed with yields on three-month bills dropping to the lowest level in more than seven years.

The Treasury Department auctioned $15 billion in three-month bills at a discount rate of 3.33%. An additional $14 billion in six-month bills was auctioned at a discount rate of 3.29%.

The three-month rate was down from 3.35% last week and was the lowest since three-month bills averaged 3.28% on Feb. 14, 1994. The six-month rate was up from 3.26% last week and was the highest since 3.35% on Aug. 6.

The new discount rates understate the actual return to investors--3.41% for three-month bills with a $10,000 bill selling for $9,914.90 and 3.39% for a six-month bill selling for $9,833.70.

In a separate report, the Federal Reserve said the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable-rate mortgages, fell to 3.44% last week from 3.5% the previous week.