Rates on 3-month Treasury bills highest in 8 years

Markets Associated Press

Interest rates on short-term Treasury bills rose in Monday's auction with rates on three-month bills climbing to their highest level in eight years.

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The Treasury Department auctioned $42 billion in three-month bills at a discount rate of 0.420 percent, up from 0.350 percent last week. Another $36 billion in six-month bills was auctioned at a discount rate of 0.535 percent, up from 0.500 percent last week.

The three-month rate was the highest since three-month bills averaged 0.530 percent on Nov. 3, 2008. The six-month rate was the highest since those bills averaged 0.540 percent on Sept. 12.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,989.38, while a six-month bill sold for $9,972.95. That would equal an annualized rate of 0.426 percent for the three-month bills and 0.544 percent for the six-month bills.

Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, stood at 0.62 percent on Friday, down slightly from 0.66 percent at the beginning of the week on Oct. 31.