Interest rates on short-term T-bills dropped.

The Treasury Department sold $7.82 billion in new three-month bills at an average discount rate of 5.32%, down from 5.64% last week. Another $7.81 billion was sold in new six-month bills at an average discount rate of 5.35%, down from 5.65% last week. The rates were the lowest since the 5.163% of July 25, 1977, for three-month bills and the 5.246% of July 1, 1977, for six-month bills. The new discount rates understate the actual return to investors--5.47% for three-month bills and 5.58% for six-month bills. The discount rate reflects the price discount received when government securities are purchased at less than face value.