BANKING & FINANCE - Oct. 22, 1996

Rates Little Changed on T-Bills: The Treasury Department sold $13.1 billion in three-month bills at an average discount rate of 5.01%, unchanged from last week. Another $13.1 billion was sold in six-month bills at an average rate of 5.12%, a slight increase from the 5.11% last week. The three-month bill rates for the last two weeks have been at the highest level since they averaged 5.18% on Sept. 23. The six-month bill rate was the highest since they averaged 5.17% on Sept. 30. The new discount rates understate the actual return to investors--5.14% for three-month bills with a $10,000 bill selling for $9,873.40 and 5.33% for a six-month bill selling for $9,741.20. Separately, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 5.55% last week from 5.57% the previous week. The next auction of two-year notes is today; the next auction of five-year notes will be Wednesday.