Interest Rates Rise in Treasury Auction

Interest rates on short-term Treasury securities rose in Monday’s auction. The Treasury Department sold $5.8 billion in three-month bills at an average discount rate of 5.0%, up from 4.95% last week. And $7.29 billion was sold in six-month bills at an average rate of 5.16%, up from 5.11%. The rates were the highest since May 26, when three-month bills sold for 5.02% and the six-month rate averaged 5.17%. The new discount rates understate the actual return to investors--5.13% for three-month bills, with a $10,000 bill selling for $9,873.70, and 5.37% for a six-month bill selling for $9,739.40. The next auction of two-year notes will be June 23; five-year notes will be sold June 24. 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, fell to 5.42% last week from 5.43% the previous week.