Treasury bill interest rates plummeted yesterday to the lowest levels in more than a year, continuing a steady decline over the past month as the economy weakened.
The average discount rate on 13-week bills fell to 11.128 percent from 12.695 percent a week earlier. The investment rate, or equivalent coupon-issue yield, was 11.61 percent compared with 13.3 percent for the previous bill auction a week ago. It was the lowest since Sept. 20, 1980, when the discount rate was 10.46 percent.
For 26-week bills, the discount rate was down to 11.51 percent from 12.721 percent. Equivalent coupon-issue yields declined to 12.39 percent from 13.78 percent a week ago, the lowest level since Oct. 20, 1980. Treasury sold $4.7 billion each of the 13-week and 26-week bills.
Discount rates understate actual investment yield because some of the price is refunded at the time of purchase, in effect.
Separately, the new ceiling rate for 2 1/2-year "small savers" certificates dropped more than a percentage point and a half from last week, Treasury anounced. At savings institutions, the new rate starting today is 13.95 percent compared with 15.55 percent. The rate for commercial banks is 13.7 percent, down from 15.30 percent. The rates are set every other week, and the new ceiling is in effect through Nov. 23.
In addition, the new ceiling for six-month money market certificates is 13.161 percent, the highest that banks and savings institutions may pay on CDs issued in denominations of $10,000 or more. The rate is computed by adding a quarter point to a four-week average of six-month T-bill rates. The previous ceiling was 13.659 percent.