Short-Term T-Bill Rates Highest Since Sept.

The Treasury Department sold $7.5 billion in three-month bills at a discount rate of 4.62%, up from 4.51% last week. An additional $7.51 billion was sold in six-month bills at a rate of 4.86%, up from 4.76%. The three-month rate was the highest since Sept. 21, 1998, when the bills sold for 4.64%. The six-month rate was the highest since Aug. 24, 1998, when the rate was 4.94%. 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 5.06% for a six-month bill selling for $9,754.60. 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 5.12% last week from 5.08% the previous week.