3-Month T-Bill Rates Drop to a 43-Year Low

Interest rates on short-term Treasury bills dropped, with the rate on three-month bills falling to the lowest level in 43 years.

The Treasury Department auctioned $16 billion in three-month bills at a discount rate of 1.735%. An additional $16 billion in six-month bills was auctioned at a discount rate of 1.765%.

The three-month rate was down from 1.92% last week and was the lowest since three-month bills averaged 1.524% on Aug. 11, 1958. The six-month rate was down from 1.990% last week and was the lowest on record.

The new discount rates understate the actual return to investors--1.769% for three-month bills with a $10,000 bill selling for $9,956.10 and 1.805% for a six-month bill selling for $9,910.80.

In a separate report, the Federal Reserve said Monday that the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable rate mortgages, fell to 2.23% last week from 2.35% the previous week.