Rates jump at weekly US Treasury bill auction; 3-month bill at highest rate in 2 weeks

MarketsAssociated Press

Interest rates on short-term Treasury bills jumped in Monday's auction, rising to their highest levels in several weeks.

The Treasury Department auctioned $24 billion in three-month bills at a discount rate of 0.095 percent, up from 0.050 percent last week. Another $24 billion in six-month bills was auctioned at a discount rate of 0.270 percent, up from 0.200 percent last week.

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Turmoil in global stock markets, stoked by economic developments in China, has sent investors to the safety of U.S. government bonds in recent weeks. That had raised the bonds' prices and lowered their rates. The rates recovered strongly last week.

The three-month Treasury bill rate in Monday's auction was the highest since those bills averaged 0.105 percent on Aug. 17. The six-month rate was the highest since those bills averaged 0.285 percent on Aug. 10.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,997.60, while a six-month bill sold for $9,986.35. That would equal an annualized rate of 0.097 percent for the three-month bills and 0.275 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, was 0.36 percent last week, down from 0.39 percent the previous week.