Rates Slip on Short-Term Treasury Bills

The Treasury Department sold $5.8 billion in three-month bills at an average discount rate of 4.92%, down from 4.95% last week. An additional $7.32 billion was sold in six-month bills at an average rate of 5.02%, down from 5.05%. The three-month rate was the lowest since Sept. 22, when the bills sold for 4.9%. The six-month rate was the lowest since July 6, when the average was 5.01%. The new discount rates understate the actual return to investors--5.05% for three-month bills, with a $10,000 bill selling for $9,875.60, and 5.22% for a six-month bill selling for $9,746.50. Separately, 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, was 5.36% last week, the same as the previous week.