Interest rates on short-term T-bills rose sharply.

The Treasury Department sold $7.6 billion in three-month bills at an average discount rate of 5.68%, up from 5.49% last week. Another $7.6 billion was sold in six-month bills at an average discount rate of 5.68%, up from 5.56% last week. The rates were the highest since Aug. 4. The new discount rates understate the actual return to investors--5.84% for three-month bills, with a $10,000 bill selling for $9,858, and 5.93% for six-month bills selling for $9,714.40. The discount rate reflects the price discount received when government securities are purchased at less than face value.