BANKING & FINANCE - Sept. 17, 1996

Rates Fall on Short-Term T-Bills: Interest rates on short-term Treasury securities fell in auction to the lowest level in several weeks. The Treasury Department sold $11.1 billion in three-month bills at an average discount rate of 5.07%, down from 5.17% last week. Another $11.1 billion was sold in six-month bills at an average rate of 5.19%, down from 5.30%. The three-month bill rate was the lowest since they sold for 5.06% on Aug. 19. The six-month bill rate was the lowest since they averaged 5.16% on Aug. 26. The new discount rates understate the actual return to investors: 5.21% for three-month bills with a $10,000 bill selling for $9,871.80 and 5.40% for a six-month bill selling for $9,737.60. 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, fell to 5.88% last week from 5.95%.

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T-Bill Auction

6-month: 5.19%

3-month: 5.07%