BANKING & FINANCE - Feb. 27, 1996

Short-Term T-Bill Rates Rise: Interest rates on short-term Treasury securities rose in auction. The Treasury Department sold $12.4 billion in three-month bills at an average discount rate of 4.86%, up from 4.78% last week. Another $12.4 billion was sold in six-month bills at an average discount rate of 4.80%, up from 4.75%. The three-month bill rate was the highest since they sold for 4.88% on Feb. 5. The six-month bill rate was the highest since they averaged 4.90% on Jan. 29. The new discount rates understate the actual return to investors: 4.99% for three-month bills, with a $10,000 bill selling for $9,877.20, and 4.99% for a six-month bill selling for $9,757.30. 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, rose to 5.04% last week from 4.81% the previous week.