The Treasury Department sold $6.4 billion in...

The Treasury Department sold $6.4 billion in three-month bills at an average discount rate of 6.51%, up from 6.44% last week. Another $6.4 billion was sold in six-month bills at an average discount rate of 6.83%, up from 6.67% last week. The three-month bill rate was the highest since May 31, when they sold for 6.53%. The six-month rate was the highest since Oct. 19, when the bills averaged 7.21%. The new discount rates understate the actual return to investors--6.71% for three-month bills, with a $10,000 bill selling for $9,835.40, and 7.17% for a six-month bill selling for $9,654.70. The discount rate reflects the price discount received when government securities are purchased at less than face value. In a separate report, the Federal Reserve said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, dropped to 7.40% last week from 7.46% the previous week.