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Interest rates on short-term Treasury bills were mixed in Monday's auction with three-month bills edging up to the highest level in 3 1/2 years while rates on six-month bills declined.

The Treasury Department auctioned $16 billion in three-month bills at a discount rate of 2.805 percent, up from 2.710 percent last week.

Another $14 billion in six-month bills was auctioned at a discount rate of 3.040 percent, down from 3.065 last week.

The new discount rates understate the actual return to investors -- 2.864 percent for three-month bills with a $10,000 bill selling for $9,929.10, and 3.130 percent for a six-month bill selling for $9,846.31. In a separate report, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, edged down to 3.32 percent last week from 3.33 percent the previous week.