Short-term rates rise at weekly US Treasury bill auction

Markets Associated Press

Interest rates on short-term U.S. Treasury bills rose in Tuesday's auction with six-month bills climbing to their highest level in nearly nine years.

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The Treasury Department auctioned $42 billion in three-month bills at a discount rate of 1.085 percent, up from 1.050 percent last week. Another $36 billion in six-month bills was auctioned at a discount rate of 1.220 percent, up from 1.190 percent last week.

The three-month rate was the highest since those bills averaged 1.180 percent on July 24. The six-month rate was the highest since those bills averaged 1.400 percent on Oct. 27, 2008.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,972.57 while a six-month bill sold for $9,938.32. That would equal an annualized rate of 1.103 percent for the three-month bills and 1.245 percent for the six-month bills.

The weekly Treasury auction, normally held on Monday, was held on Tuesday this week because of the Columbus Day federal holiday.

Separately, the Federal Reserve said Tuesday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, stood at 1.35 percent on Monday, up from 1.32 percent on Oct. 3.