Interest Rates Fall in Treasury Bill Auction

The Treasury Department sold $18 billion in three-month bills at a discount rate of 0.840%, down from 1.005% last week. An additional $18 billion was sold in six-month bills at a rate of 0.845%, down from 0.980%.

The three-month rate was the lowest since June 30, 1958, when the bills sold for 0.768%. The six-month rate was the lowest since the government began selling these bills on a regular basis in 1958.

The new discount rates understate the actual return to investors -- 0.854% for three-month bills with a $10,000 bill selling for $9,978.80 and 0.862% for a six-month bill selling for $9,957.30.

In a separate report, the Federal Reserve said the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable rate mortgages, fell to 0.97% last week from 1.08% the previous week.