BANKING & FINANCE - June 26, 1996

Yields on 2-Year Notes Rise: Yields on two-year Treasury notes rose at auction to the highest level in more than a year. The high yield was 6.3%, up from 6.053% at the last auction on May 29. It was the highest rate since two-year notes sold for 6.524% on April 25, 1995. A total of $18.8 billion in notes were sold out of bids totaling $48.0 billion. Meanwhile, the average yield for one-year Treasury bills fell to 5.82% last week from 5.86% the previous week. Separately, interest rates on short-term Treasury securities were mixed at auction. The Treasury Department sold $13.1 billion in three-month bills at an average discount rate of 5.1%, up from 5.08% last week, and the highest since June 10, when bills sold for 5.16%. Another $13.1 billion was sold in six-month bills at an average rate of 5.23%, down from 5.27%, and the lowest since they averaged 5.21% on June 3. Auction of five-year notes is scheduled for today. Auction of 10-year notes is scheduled for July 9.