BANKING & FINANCE - July 16, 1996

Rates on Short-Term T-Bills Fall: Rates on short-term Treasury securities fell in auction to the lowest level in two weeks. The Treasury Department sold $14.2 billion in three-month bills at an average discount rate of 5.19%, down from 5.21% last week. Another $14.0 billion was sold in six-month bills at an average rate of 5.36%, down from 5.41%. The three-month bill rate was the lowest since they sold for 5.12% on July 1. The six-month bill rate was the lowest since they averaged 5.22%, also on July 1. The new discount rates understate the actual return to investors--5.33% for three-month bills with a $10,000 bill selling for $9,868.80 and 5.59% for a six-month bill selling for $9,729. In a separate report, the Federal Reserve Board said the average yield for one-year T-bills rose to 5.90% last week from 5.82% the previous week. The next auction of two-year notes is July 23; five-year notes on July 24.

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T-Bill Auction (July 15, 1996)

6-month: 5.36%

3-month: 5.19%