BANKING & FINANCE - July 23, 1996

Short-Term T-Bill Rates Fall: Interest rates fell in auction to the lowest level in three weeks. The Treasury Department sold $13.6 billion in three-month bills at an average discount rate of 5.14%, down from 5.19% last week. Another $13.6 billion was sold in six-month bills at an average rate of 5.30%, down from 5.36%. 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: 5.28% for three-month bills, with a $10,000 bill selling for $9,870.10, and 5.52% for a six-month bill selling for $9,732.10. The next auction of two-year notes is today; five-year notes will be sold July 24.