T-Bill Rates at Lowest Level in 40 Years

Interest rates on short-term Treasury securities fell at auction to the lowest point in 40 years.

The Treasury Department sold $14 billion in three-month bills at a discount rate of 2.38%, down from 2.56% last week. An additional $12 billion was sold in six-month bills at a rate of 2.36%, down from 2.57%.

The three-month rate was the lowest since Nov. 6, 1961, when the bills sold for 2.35%. The six-month rate was the lowest since April 24, 1961, when the rate was 2.3%.

The new discount rates understate the actual return to investors--2.43% for three-month bills with a $10,000 bill selling for $9,939.80 and 2.42% for a six-month bill selling for $9,880.70.

In a separate report, the Federal Reserve said that the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable-rate mortgages, fell to 2.60% last week from 3.02% the previous week.