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T-BILL YIELDS AT 40-YEAR LOW

Interest rates on short-term Treasury securities fell in Monday's auction to their lowest levels in nearly 40 years.

The Treasury Department sold $14 billion in three-month bills at a discount rate of 2.560 percent, down from 3.180 percent last week.

An additional $12 billion was sold in six-month bills at a rate of 2.570 percent, down from 3.120 percent.

The three-month rate was the lowest since Nov. 20, 1961, when the bills sold for 2.537 percent. The six-month rate was the lowest since Nov. 6, 1961, when the rate was 2.554 percent.

The new discount rates understate the actual return to investors -- 2.612 percent for three-month bills with a $10,000 bill selling for $9,935.30, and 2.639 percent for a six-month bill selling for $9,870.10.

Separately, 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, were at 3.02 percent, down from 3.43 percent.

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