Rates rise at weekly Treasury auction

WASHINGTON (AP) -- Interest rates on short-term Treasury bills rose in Monday's auction, with the rate on three-month bills hitting its highest level in 16 months.

The Treasury Department auctioned $29 billion in three-month bills at a discount rate of 0.180 percent, up from 0.130 percent last week. Another $28 billion in six-month bills was auctioned at a discount rate of 0.225 percent, up from 0.185 percent last week.

The three-month rate was the highest since these bills averaged 0.185 percent on Aug. 10, 2009. The six-month rate was the highest since these bills averaged 0.230 percent on May 17.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,995.45 and the six-month bill sold for $9,988.63. That would equal an annualized rate of 0.183 for the three-month bills and 0.228 for the six-month bills.

The department also auctioned on Monday $35 billion in two-year notes at a rate of 0.740 percent. That was up from a rate of 0.520 percent at the last auction on Nov. 22. It was the highest rate since two-year notes averaged 0.769 percent on May 25.

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, held steady at 0.30 percent last week, unchanged from the previous week.