Treasury Bill Rates Climb at Auction

The Treasury Department sold $7.5 billion in three-month bills at a discount rate of 4.85%, up from 4.68% last week. An additional $7.5 billion was sold in six-month bills at a rate of 4.95%, up from 4.90%. The three-month rate is the highest since Aug. 24, 1998, when the bills sold for 4.92%. The six-month rate is the highest since June 28, when the rate was 4.96%. The new discount rates understate the actual return to investors--4.99% for three-month bills, with a $10,000 bill selling for $9,876.10, and 5.16% for a six-month bill selling for $9,749.80. The next auction of two-year notes is set for Wednesday. In a separate report, the Federal Reserve said the average yield for one-year Treasury bills, the most widely used index for making changes in adjustable-rate mortgages, fell to 5.2% last week from 5.23% the previous week.