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Interest rates on short-term Treasury securities fell in Monday's auction to the lowest point in 40 years.

The Treasury Department sold $14 billion in three-month bills at a discount rate of 2.380 percent, down from 2.560 percent last week.

An additional $12 billion was sold in six-month bills at a rate of 2.360 percent, down from 2.570 percent.

The three-month rate was the lowest since Nov. 6, 1961, when the bills sold for 2.349 percent. The six-month rate was the lowest since April 24, 1961, when the rate was 2.300 percent.

The new discount rates understate the actual return to investors -- 2.429 percent for three-month bills with a $10,000 bill selling for $9,939.80, and 2.421 percent for a six-month bill selling for $9,880.70.

In a separate report, the Federal Reserve said Monday that the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable rate mortgages, fell to 2.60 percent last week from 3.02 percent the previous week.

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