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

The Treasury Department sold $6.4 billion in new three-month bills at an average discount rate of 6.03%, up from 5.47% last week. Another $6.4 billion was sold in six-month bills at an average discount rate of 6.34%, up from 5.74% last week. The rates were the highest since last June 23, when three-month bills sold for 6.09%, and June 9, when six-month bills averaged 6.39%. The new discount rates understate the actual return to investors--6.22% for three-month bills, with a $10,000 bill selling for $9,847.60, and 6.66% for asix-month bill selling for $9,679.50. The discount rate reflects the price discount received when government securities are purchased at less than face value.