Interest rates on short-term Treasury securities rose...

Interest rates on short-term Treasury securities rose in Monday’s auction, with rates on six-month bills hitting the highest level in three years. The Treasury Department sold $6.8 billion in three-month bills at an average discount rate of 7.05%, up from 6.94% last week. Another $6.8 billion was sold in six-month bills at an average discount rate of 7.51%, up from 7.26% last week. The rates were the highest since three-month bills sold for 7.18% on Feb. 10, 1986, and six-month bills averaged 7.52% on Aug. 5, 1985. The new discount rates understate the actual return to investors--7.28% for three-month bills, with a $10,000 bill selling for $9,821.80 and 7.92% for a six-month bill selling for $9,620.30. In a separate report Monday, the Federal Reserve said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, rose to 8.17% last week from 7.89% the previous week.