BANKING & FINANCE - May 24, 1994

Treasury Bills Mixed: The Treasury Department sold $12.8 billion of new three-month bills at an average discount rate of 4.23%, up from 4.22% last week. Another $12.6 billion of new six-month bills was sold at an average discount rate of 4.63%, down from 4.69%. The new discount rates understate the actual return to investors: 4.33% for three-month bills, with a $10,000 bill selling for $9,893.10, and 4.81% for a six-month bill selling for $9,764.60. 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 Board said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, fell to 5.23% last week from 5.49% the week before.

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T-Bill Auction (May 23, 1994)

6-month: 4.63%

3-month: 4.23%