Short-Term T-Bill Rates Fall in Auction

The Treasury Department sold $11 billion in three-month bills at an average discount rate of 4.97%, down from 5.12% last week. An additional $11.9 billion was sold in six-month bills at an average rate of 5.07%, down from 5.14%. The rates were the lowest since June 23, when three-month bills sold for 4.94% and six-month bills averaged 5.05%. The new discount rates understate the actual return to investors--5.10% for three-month bills, with a $10,000 bill selling for $9,874.40, and 5.28% for a six-month bill selling for $9,743.70. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 5.63% last week from 5.65% the previous week. The next auction of inflation-indexed, five-year notes will be Wednesday; the next auction of 52-week Treasury bills will be July 17; two-year notes on July 22; and five-year notes on July 23. The Fed has announced that there will be no auction of 10-year notes for July or October.