Rates Slip on Short-Term Treasury Bills

The Treasury Department sold $5.76 billion in three-month bills at an average discount rate of 4.94%, down from 4.98% last week. An additional $7.26 billion was sold in six-month bills, also at an average rate of 4.94%, down from 5.03%. The three-month rate was the lowest since July 27, when the bills sold for 4.92%. The six-month rate was the lowest since Jan. 12, when the average was 4.91%. The new discount rates understate the actual return to investors--5.07% for three-month bills with a $10,000 bill selling for $9,875.10 and 5.14% for a six-month bill selling for $9,750.30. 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, declined to 5.31% from 5.37% the previous week.