Short-Term T-Bill Rates Rise to 8-Month High

The Treasury Department sold $7.5 billion in three-month bills at a discount rate of 4.62%, up from 4.49% last week. Another $7.5 billion was sold in six-month bills at a rate of 4.75%, up from 4.57%. The three-month rate is the highest since Sept. 21, 1998, when the bills sold for 4.63%. The six-month rate is the highest since Sept. 14, when the rate was 4.75%. The new discount rates understate the actual return to investors--4.75% for three-month bills, with a $10,000 bill selling for $9,883.20, and 4.95% for a six-month bill selling for $9,759.90. An auction of two-year notes is tentatively scheduled for June 23. In a separate report, 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 4.93% last week from 4.89% the previous week.