Treasury Bill Rates Decline at Auction

The Treasury Department sold $7.5 billion in three-month bills at a discount rate of 5.235%, down from 5.360% last week, and $6.5 billion in six-month bills, at a rate of 5.420%, down from 5.585% last week. The three-month rate is the lowest since Dec. 13, 1999, when the bills sold for 5.210%. The six-month rate is the lowest also since Dec. 13, when it was 5.410%. The new discount rates understate the actual return to investors--5.392% for three-month bills, with a $10,000 bill selling for $9,867.70, and 5.665% for a six-month bill selling for $9,726.00. An auction of two-year notes is scheduled tentatively for Jan. 26, and an auction of the 10-year inflation index note is scheduled tentatively for Wednesday. In a separate report, the Federal Reserve said that the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, rose to 6.03% last week from 5.95% the week before.