BANKING & FINANCE - May 7, 1996

Rates on Short-Term T-Bills Rise: The Treasury Department sold $13.7 billion in three-month bills at an average discount rate of 5.02%, up from 5% last week. Another $13.5 billion was sold in six-month bills at an average discount rate of 5.14%, up from 5.08%. The three-month bill rate was the highest since they sold for 5.03% on April 8. The six-month bill rate was the highest since they averaged 5.19%, also on April 8. The new discount rates understate the actual return to investors: 5.16% for three-month bills, with a $10,000 bill selling for $9,873.10, and 5.35% for a six-month bill selling for $9,740.10. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills rose to 5.63% last week from 5.52% the previous week. Meanwhile, the Treasury announced the following auction dates: three-year notes to be sold today, 10-year notes on May 8, two-year notes on May 29 and five-year notes on May 30.

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T-Bill Auction (May 6)

6-month: 5.14%

3-month: 5.02%