Rates fall at weekly US Treasury bill auction; 3-month bill at lowest rate ever

Interest rates on short-term Treasury bills fell in Monday's auction, with the rate on three-month bills hitting its lowest level ever and the rate on six-month bills the lowest since mid-July.

The Treasury Department auctioned $20 billion in three-month bills at a discount rate of 0.005 percent, its lowest level ever and down from 0.055 percent last week. Another $20 billion in six-month bills was auctioned at a discount rate of 0.115 percent, down from 0.260 percent last week.

The Federal Reserve ended weeks of speculation Thursday by keeping U.S. interest rates at record lows in the face of threats from a weak global economy, persistently low inflation and unstable financial markets. Financial markets had been zigzagging with anxiety this summer as investors tried to figure out whether the Fed would start phasing out the period of extraordinarily low borrowing rates it launched at a time of crisis.

The six-month Treasury bill rate in Monday's auction was the lowest since those bills averaged 0.100 percent on July 13.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999.87 while a six-month bill sold for $9,994.19. That would equal an annualized rate of 0.005 percent for the three-month bills and 0.117 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 0.41 percent last week from 0.39 percent the previous week.