Interest rates on short-term Treasury bills fell.

The Treasury Department sold $7.2 billion in new three-month bills at an average discount rate of 6.92%, down from 6.98% last week. Another $7.2 billion was sold in new six-month bills at an average discount rate of 7.03%, down from 7.14% last week. The rates were the lowest since three-month bills sold for 6.81% on Sept. 23 and six-month bills averaged 7.01% on Dec. 16. The new discount rates understate the actual return to investors--7.14% for three-month bills sold at $9,825.10 for a $10,000 bill and 7.39% for six-month bills sold at $9,644.60. The discount rate reflects the price discount received when government securities are purchased at less than face value.

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