T-Bill Rates at Lowest Level in 40 Years

Interest rates on short-term Treasury bills fell to the lowest levels in 40 years.

The Treasury Department auctioned $13 billion in three-month bills at a discount rate of 2.32%. An additional $11 billion in six-month bills was auctioned at a discount rate of 2.32%.

The three-month rate was down from 2.38% last week and was the lowest since three-month bills averaged 2.28% on Oct. 30, 1961. The six-month rate was down from 2.36% last week and was the lowest since 2.30% on April 24, 1961.

The new discount rates understate the actual return to investors--2.36% for three-month bills, with a $10,000 bill selling for $9,941.40, and 2.38% for a six-month bill selling for $9,882.50.

In a separate report, 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, fell to 2.49% last week from 2.60% the previous week.