BANKING & FINANCE - Dec. 12, 1995

Treasury Bill Interest Rates Rise: Interest rates on short-term Treasury securities rose at auction to the highest level in two weeks. The Treasury Department sold $14.1 billion in three-month bills at an average discount rate of 5.30%, up from 5.29% last week. Another $14.1 billion was sold in six-month bills at an average discount rate of 5.2%, up from 5.19%. The three-month bill rate was the highest since they sold for 5.32% on Nov. 27. The six-month bill rate was the highest since they averaged 5.25%, also on Nov. 27. The new discount rates understate the actual return to investors: 5.46% for three-month bills, with a $10,000-bill selling for $9,866, and 5.43% for a six-month bill selling for $9,737.10. 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 5.35% last week from 5.39% the previous week.