Interest Rates Mixed in T-Bill Auction

Interest rates on short-term Treasury securities were mixed, with the Treasury Department selling $10.7 billion in three-month bills at an average discount rate of 4.96%, down from 4.98% last week. An additional $10.7 billion was sold in six-month bills at an average rate of 5.15%, up from 5.12%. The three-month bill rate was the lowest since they sold for 4.93% on Oct. 6. The six-month bill rate was the highest since they averaged 5.19% on Sept. 2. The new discount rates understate the actual return to investors--5.09% for three-month bills, with a $10,000 bill selling for $9,874.60, and 5.36% for a six-month bill selling for $9,739.60. In a separate report, the Federal Reserve Board said that the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, rose to 5.52% last week, from 5.45% the previous week. The next auction of two-year notes will be Oct. 28; the next for five-year notes will be Oct. 29.