Rate on 6-month Treasury bills hits new record low

WASHINGTON (AP) — Interest rates on six-month Treasury bills hit a record low for the third consecutive week.

The Treasury Department on Monday auctioned $29 billion in six-month bills at a discount rate of 0.210 percent. That was down from last week's 0.225 percent and 0.240 percent in the previous week, the previous records. The government started issuing these bills weekly in December 1958.

Another $29 billion in three-month bills were auctioned at a discount rate of 0.135 percent, the lowest level since 0.120 percent on Jan. 12. Last week, three-month bills sold for 0.140 percent.

Rates on three- and six-month bills have been moving in a narrow band below 1 percent for months, reflecting a campaign by the Federal Reserve to push short-term borrowing costs down in an effort to jump-start the U.S. economy and pull the country out of the longest recession since the 1930s.

In December, the Fed slashed its target for the federal funds rate, the interest that banks charge each other on overnight loans, to an all-time low of zero to 0.25 percent. At its last meeting on Aug. 12, the Fed continued to leave the funds rate unchanged and repeated a pledge to leave rates low for an extended period.

Many private economists believe the Fed will not start boosting interest rates until the middle of next year at the earliest, preferring to wait until the unemployment rate begins to improve.

While many economists believe the recession ended sometime during the current July-September quarter, they are looking for the jobless rate, which hit a 26-year high of 9.7 percent in August, to keep rising through next spring, peaking above 10 percent.

The discount rates reflect that the Treasury bills sell for less than face value. For a $10,000 bill, the three-month price was $9,996.59, while a six-month bill sold for $9,989.38. That would equal an annualized rate of 0.137 percent for the three-month bills, and 0.213 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 0.40 percent last week from 0.42 percent the previous week.