T-bills hit 3-year high

January 19, 2005|Associated Press

WASHINGTON -- Interest rates on short-term Treasury bills rose in yesterday's auction to the highest levels in more than three years.

The Treasury Department auctioned $19 billion in three-month bills at a discount rate of 2.360 percent. Another $16 billion in six-month bills was auctioned at a discount rate of 2.635 percent.

The three-month rate was up from 2.330 percent last week and was the highest since three-month bills averaged 2.380 percent on Sept. 24, 2001. The six-month rate was up from 2.600 percent last week and was the highest since 3.120 percent on Sept. 9, 2001.

The new discount rates understate the actual return to investors -- 2.407 percent for three-month bills with a $10,000 bill selling for $9,940.34 and 2.708 percent for a six-month bill selling for $9,866.79.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 2.85 percent last week from 2.82 percent the previous week.

Both the Treasury weekly auction and release of the Fed report were delayed this week because of the Martin Luther King Jr. holiday.