Short-Term Rates at Highest Level in 4 Years

The Treasury Department sold $9 billion in three-month bills at a discount rate of 5.4%, up from 5.21% last week and the highest level since Nov. 13, 1995. An additional $8 billion was sold in six-month bills at a rate of 5.6%, up from 5.41%, the highest rate since May 30, 1995. The new discount rates understate the actual return to investors--5.566% for three-month bills, with a $10,000 bill selling for $9,863.50, and 5.859% for a six-month bill selling for $9,716.90. An auction of two-year notes is scheduled for Wednesday. Separately, the Federal Reserve said that the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, rose to 5.85% last week from 5.69% the previous week.