Yields Decline on Short-Term Treasuries

The Treasury Department sold $5.76 billion in three-month bills at an average discount rate of 4.80%, down from 4.92% last week. An additional $7.25 billion was sold in six-month bills at an average rate of 4.83%, down from 4.94%. The three-month rate was the lowest since Dec. 16, 1996, when the bills sold for 4.76%. The six-month rate was the lowest since March 4, 1996, when the average was 4.80%. The new discount rates understate the actual return to investors--4.93% for three-month bills, with a $10,000 bill selling for $9,878.70, and 5.02% for a six-month bill selling for $9,755.80. 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, fell to 5.10% last week from 5.24% the previous week.