Rates in Treasury auction rise to highest level since 2008

Interest rates on short-term Treasury bills rose to the highest levels in almost nine years in Monday's auction.

The Treasury department auctioned $39 billion in three-month bills at a discount rate 1.05 percent, up from 1.00 percent last week. Another $33 billion in six-month bills was auctioned at a discount rate of 1.13 percent, up from 1.11 percent last week.

The rates short-term rates were the highest since the height of the financial crisis in October 2008. The Federal Reserve last month raised a key short-term interest rate for the first time in six months, a vote of confidence in the health of the economy.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,973.58 while a six-month bill sold for $9,942.87. That would equal an annualized rate of 1.06 percent for the three-month bills and 1.15 percent for the six-month bills.

Separately, the Fed said Monday that the average yield for one-year Treasury bills, a popular index for setting adjustable-rate mortgages, rose to 1.24 percent last Friday after starting the week at 1.20 percent.