Short Term T-Bill Rates at 7-Year Lows

The Treasury Department sold $15 billion in three-month bills at a discount rate of 3.375%, down from 3.435% last week. An additional $12 billion was sold in six-month bills at a rate of 3.34%, down from 3.38%.

The three-month rate was the lowest since Feb. 22, 1994. The six-month rate was the lowest since Jan. 31, 1994. Rates have tumbled in recent weeks as investors have anticipated that the Federal Reserve will continue easing credit. The Fed meets today and Wednesday.

The new discount rates understate the actual return to investors--3.451% for three-month bills with a $10,000 bill selling for $9,914.70 and 3.445% for a six-month bill selling for $9,831.10.

Separately, the Fed said the average yield for one-year constant maturity Treasury bills fell to 3.46% last week from 3.59% the previous week.