WASHINGTON - The interest rate on two-year Treasury notes has dropped below 1 percent to the lowest level on record.
The Treasury Department said yesterday it auctioned $38 billion in two-year notes at a yield of 0.92 percent, a record low. The rate was down from 1.26 percent at the last auction of two-year notes on Nov. 24.
Treasury rates have fallen to historic lows as the worst financial crisis in 70 years has triggered a rush by investors to the safety of Treasury securities.
Yields were mixed at the weekly auction of three-month and six-month bills. Rates on three-month bills declined, while rates on six-month bills rose.
The Treasury Department auctioned $27 billion in three-month bills at a discount rate of 0.04 percent, down from 0.05 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.285 percent, up from 0.27 percent last week.
The three-month rate was the lowest since three-month bills averaged 0.005 percent on Dec. 8. The six-month rate was the highest since these bills averaged 0.30 percent, also on Dec. 8.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,999 while a six-month bill sold for $9,985.67. That would equal an annualized rate of 0.04 percent for the three-month bills, and 0.28 percent for the six-month bills.
Separately, the Federal Reserve said yesterday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 0.45 percent last week from 0.50 percent the previous week.