BANKING & FINANCE - Aug. 13, 1996

Short-Term T-Bill Rates Fall: Interest rates on short-term Treasury securities fell in auction to the lowest level in several months. The Treasury Department sold $12.6 billion in three-month bills at an average discount rate of 5.04%, down from 5.08% last week. Another $12.5 billion was sold in six-month bills at an average rate of 5.08%, down from 5.13%. 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 5.02% on April 22. The new discount rates understate the actual return to investors: 5.18% for a three-month bill, with a $10,000 bill selling for $9,872.60, and 5.29% for a six-month bill selling for $9,743.20. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 5.60% last week from 5.80% the previous week.