Long Term Perspective
The spread between the 6-month Treasury bill and the federal funds rate can be negative, where the yield on the 6-month bill could be lower than the fed funds rate. In the 1980s, this spread averaged -15 basis points, but averaged zero basis points in the 1990s.

Between 2000 and 2005, the yield on the 6-month Treasury bill was the same as the federal funds rate, on average. It is worth noting that the average spread was quite different in 2004 and 2005 when the 6-month bill yield was roughly 25 to 30 basis points higher than the fed funds rate.

Short Term Perspective
The gap between the 6-month bill and the federal funds rate remained virtually zero from July 2003 through March 2004. Since April 2004, the 6-month bill rate has surpassed the fed funds rate. When this short-term rate surpasses the fed funds rate, it suggests that bond investors are anticipating further rate hikes in coming months. The average yield for 6-month bill decreased 10 basis points in August from the July average to 5.17 percent.