New T-Bill Rates Fall to Lowest Level Since Late 1988
NEW YORK -- Interest rates on new short-term Treasury bills tumbled to their lowest levels since late last year.</br></br>But bills still are extremely popular among individual investors, partly reflecting fears that recent surges in both stocks and bonds may be short-lived. Individuals bought especially large amounts of new three-month bills yesterday at the government's regular weekly auction.</br></br>The average rate on these new bills dropped to 8.21%, the lowest since December and down from 8.41% at last week's sale. That translated into a bond-equivalent yield of 8.50%, down from 8.71% last week. As recently as the end of March, similar bills yielded nearly 9 1/2%. But most other rates and bond yields ended at about the same levels as on Friday.</br></br>Both stock and bond prices soared Friday after the government reported an unexpectedly small 0.4% rise in producer prices last month. That, coupled with growing signs of slower economic growth and the dollar's recent strength, sparked speculation that the Federal Reserve will ease credit at a meeting in Washington, D.C., today.</br></br>However, that speculation now appears wrong. Government officials said late yesterday in interviews with The Wall Street Journal that the Fed probably won't ease short-term interest rates at today's meeting because of continued concern about inflation.