Rate on 6-month Treasury bills hits record low

The interest rate on six-month U.S. Treasury bills dropped to its lowest level on record at the weekly Treasury auction, the government said Monday.

The Treasury Department said it auctioned $27 billion in six-month bills at a yield of 0.25 percent, an all-time low. That's down from a rate of 0.285 percent last week.

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 government securities. Higher demand for such securities pushes their yield, or interest rate, down.

The lower rates make it cheaper for the government to borrow money, just as the federal deficit is set to balloon due to the rising cost of aid to banks, increased spending on unemployment insurance and lower tax revenues.

The department also auctioned $26 billion in three-month bills at a yield of 0.05 percent, up slightly from last week's 0.04 percent. That matches the rate from two weeks ago and is the highest since three-month bills averaged 0.15 percent on Nov. 24.

Earlier this month, rates on the three-month bill fell to a record low of 0.005 percent.

The rates are known as discount rates because the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,998.75 while a six-month bill sold for $9,987.43. That equals an annualized rate of 0.051 percent for three-month bills and 0.254 percent for the six-month securities.