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WASHINGTON (AP) — Interest rates on short-term Treasury securities
dropped in Monday’s auction, with rates on six-month bills falling
to a record low.
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The Treasury Department auctioned $27 billion in three-month bills
at a discount rate of 0.020 percent, down from 0.030 percent last
week. Another $24 billion was auctioned in six-month bills at a
discount rate of 0.060 percent, down from 0.065 percent last
week.
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The three-month rate was lowest since those bills averaged 0.005
percent in December 2008. The six-month rate is the lowest on
records. The low rates show that investors still see U.S. Treasury
debt as safe, even as the White House and Congress are locked in
negotiations over raising the borrowing limit. If the talks fail
and the $14.3 trillion limit isn’t raised by Aug. 2, the Treasury
says the government will default on its obligations.
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The discount rates reflect that the bills sell for less than face
value. For a $10,000 bill, the three-month price was $9,999.49
while a six-month bill sold for $9,996.97. That would equal an
annualized rate of 0.020 percent for the three-month bills and
0.061 percent for the six-month bills.
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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, was 0.16 percent last week, down from
0.19 percent the previous week.
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