Rate rises on 3-month US Treasury bills at weekly auction

The interest rate on three-month Treasury bills rose in Monday's auction to the highest level in more than nine years. The rate on six-month bills was unchanged at a continued high level.

The Treasury Department auctioned $51 billion in three-month bills at a discount rate of 1.660 percent, up from 1.645 percent last week. Another $45 billion in six-month bills was auctioned at a discount rate of 1.830 percent, steady from last week.

The three-month rate was the highest since those bills averaged 1.690 percent on Sept. 8, 2008, at the height of the financial crisis. The six-month rate was the highest since those bills averaged 1.900 percent, also on Sept. 8, 2008.

Interest rates generally have increased in recent weeks in response to higher levels of U.S. government debt and expectations of rising inflation.

The discount rates on Treasury bills reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,958.04 while a six-month bill sold for $9,907.48. That would equal an annualized rate of 1.690 percent for the three-month bills and 1.873 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, rose to 2.05 percent last Thursday, compared with 2.03 percent on Monday, Feb. 26.