BANKING & FINANCE - July 30, 1996

Rates on Short-Term T-Bills Rise: Interest rates on short-term Treasury securities rose in auction to the highest level in several weeks. The Treasury Department sold $13 billion in three-month bills at an average discount rate of 5.20%, up from 5.14% last week. Another $13.2 billion was sold in six-month bills at an average rate of 5.34%, up from 5.30%. The three-month bill rate was the highest since they sold for 5.21% on July 8. The six-month bill rate was the highest since they averaged 5.36% on July 15. The new discount rates understate the actual return to investors: 5.34% for three-month bills, with a $10,000 bill selling for $9,868.60, and 5.57% for a six-month bill selling for $9,730.00. 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 5.85% last week from 5.80% the previous week.

T-Bill Auction (please see newspaper for full chart)

July 29:

6-month: 5.34%

3-month: 5.20%