KFDA - NewsChannel 10 / Amarillo, TX: newschannel10.comInterest rates mixed at Treasury auction

Interest rates mixed at Treasury auction

WASHINGTON (AP) - Interest rates on six-month Treasury bills remained at a record low in Monday's auction, while rates on three-month bills rose.

The Treasury Department on Monday auctioned $29 billion in six-month bills at a discount rate of 0.190 percent, the same as last week. That's the lowest rate since the government started issuing six-month bills on a weekly basis in December 1958.

About $30 billion in three-month bills were auctioned at a discount rate of 0.115 percent, up from 0.1 percent last week.

Rates on three- and six-month bills have been selling at historically low levels for months, reflecting a campaign by the Federal Reserve to push down short-term borrowing costs in an effort to help support a recovery from the country's worst recession since the 1930s.

Fed officials last week agreed to keep the federal funds rate, the interest that banks charge each other on overnight loans, at an all-time low of zero to 0.25 percent. The funds rate has been at that level since December.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,997.09, while a six-month bill sold for $9,990.39. That would equal an annualized rate of 0.117 percent for the three-month bills, and 0.193 percent for the six-month bills.

Separately, the Federal Reserve said Monday the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose slightly last week to 0.41 percent from 0.40 percent.

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