Interest rates on short-term T-bills declined.

The Treasury Department sold $7 billion in new three-month bills at an average discount rate of 5.84%, down from 6.19% last week. Another $7 billion was sold in new six-month bills at an average discount rate of 5.93%, down from 6.17% last week. The rates were the lowest since three-month bills averaged 5.55% on Sept. 2, 1977, and six-month bills sold for 5.85% on Sept. 2, 1977. The new discount rates understate the actual return to investors--6.01% for three-month bills and 6.20% for six-month bills. The discount rate reflects the price discount received when government securities are purchased at less than face value.

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