Short-Term Treasury Rates Decline

The Treasury Department sold $5.8 billion in three-month bills at an average discount rate of 4.96%, down from 5% last week. An additional $7.31 billion was sold in six-month bills at an average rate of 5.01%, down from 5.06%. The three-month rate was the lowest since June 1, when the bills sold for 4.95%. The six-month rate was the lowest since April 6, when the average was 5%. 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 5.21% for a six-month bill selling for $9,746.70. The next auction of the 29 3/4-year inflation-indexed bond will be Wednesday, followed by auctions of two-year notes on July 29, five-year notes on Aug. 11, 10-year notes on Aug. 12 and the 30-year bond on Aug. 13. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 5.38% last week from 5.41% the previous week.