BANKING & FINANCE - Jan. 17, 1996

Short-Term T-Bill Rates Fall: Interest rates on short-term Treasury securities fell in Tuesday’s auction. The Treasury Department sold $12.5 billion in three-month bills at an average discount rate of 5.02%, down from 5.03% last week. An additional $12.5 billion was sold in six-month bills at an average discount rate of 4.93%, down from 5.02%. The new discount rates understate the actual return to investors: 5.17% for three-month bills, with a $10,000 bill selling for $9,873.10, and 5.14% for a six-month bill selling for $9,750.80. 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 5.17% last week from 5.18% the previous week.