Interest Rates Dip on Short-Term T-Bills

The Treasury Department sold $9 billion in three-month bills at a discount rate of 5.30%, down from 5.40% last week. An additional $8 billion was sold in six-month bills at a rate of 5.50%, down from 5.60%. The three-month rate was the lowest since Dec. 13, when the bills sold for 5.21%. The six-month rate also was the lowest since Dec. 13, when the rate was 5.41%. The new discount rates understate the actual return to investors--5.46% for three-month bills with a $10,000 bill selling for $9,866 and 5.76% for a six-month bill selling for $9,721.70. An auction of two-year notes is scheduled tentatively for Jan. 26. In a separate report, the Federal Reserve said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, rose to 5.97% last week from 5.85% the previous week.