BANKING & FINANCE - Aug. 6, 1996

Rates on T-Bills Fall: Interest rates fell in auction to the lowest level since May. The Treasury Department sold $13.2 billion in three-month bills at an average discount rate of 5.08%, down from 5.20% last week. An additional $13.1 billion was sold in six-month bills at an average rate of 5.13%, down from 5.34%. The three-month bill rate was the lowest since they sold for 5.03% on May 28. The six-month bill rate was the lowest since they averaged 5.11% on May 20. The new discount rates understate the actual return to investors--5.22% for three-month bills with a $10,000 bill selling for $9,871.60 and 5.34% for a six-month bill selling for $9,740.70. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 5.80% last week from 5.85% the previous week. The Treasury will auction three-year notes today, followed by nine-year notes Wednesday and 30-year bonds Thursday.