Interest rates drop at weekly Treasury auction

WASHINGTON - Interest rates on short-term Treasury bills fell in Monday's auction with rates on three-month bills dropping to the lowest level since late April.

The Treasury Department auctioned $24 billion in three-month bills at a discount rate of 1.520 percent, down from 1.610 percent last week. Another $23 billion in six-month bills was auctioned at a discount rate of 1.920 percent, down from 1.955 percent last week.

The three-month rate was the lowest since these bills averaged 1.420 percent on April 28. The six-month rate was the lowest since these bills averaged 1.885 percent on May 19.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,961.58 while a six-month bill sold for $9,902.93. That would equal an annualized rate of 1.547 percent for the three-month bills and 1.966 percent for the six-month bills.

Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 2.21 percent last week from 2.25 percent the previous week.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.