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

The Treasury Department sold $6.4 billion of new three-month bills at an average discount rate of 5.72%, up from 5.55% last week. Another $6.4 billion was sold in new six-month bills at an average discount rate of 5.80%, up from 5.55% last week. The new discount rates understate the actual return to investors--5.90% for three-month bills, with a $10,000 bill selling for $9,855.40, and 6.07% for six-month bills selling for $9,706.80. The discount rate reflects the price discount received when government securities are purchased at less than face value.