NEW YORK: Interest rates on US Treasury bills rose on Monday, with the six-month T-bill rate hitting its highest in more than seven years as a solid November payrolls report raised expectations the Federal Reserve would raise interest rates next week.
Short-term interest rates futures implied traders have priced in more than a three-in-four chance the US central bank will end its near-zero rate policy next Wednesday, according to CME Group's FedWatch program. On the open market, the three-month T-bill rate was last at 0.252 percent, a level last seen in February 2009, and the six-month rate was last at 0.543 percent, the highest since November 2008, according to Tradeweb data.
The US Treasury Department sold $28 billion of three-month bills at an interest rate of 0.28 percent, which was the highest level at an auction since March 2, 2009.
It also sold $26 billion of six-month bills at an interest rate of 0.535 percent, the highest since Nov. 17, 2008.
"It has been a very long time since we have seen anything like this in the bill market, as yields adjust to reflect the probability of upcoming rate hikes," Jefferies & Co.'s money market strategist Tom Simons wrote in a research note on Monday's T-bill sales.
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