Rates rise at US Treasury bill auction to highest in 8 years

Interest rates on short-term Treasury bills rose in Monday's auction to their highest levels in eight years.

The Treasury Department auctioned $34 billion in three-month bills at a discount rate of 0.530 percent, up from 0.490 percent last week. Another $28 billion in six-month bills was auctioned at a discount rate of 0.645 percent, up from 0.615 percent last week.

The three-month rate was the highest since three-month bills averaged 0.900 percent on Oct. 27, 2008. The six-month rate was the highest since those bills averaged 0.840 percent on Nov. 17, 2008.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,986.60, while a six-month bill sold for $9,967.39. That would equal an annualized rate of 0.538 percent for the three-month bills and 0.656 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, ended last week at 0.85 percent, up slightly 0.82 percent where it started the week on Dec. 5.