Short-Term T-Bill Rates Rise at Auction

The Treasury Department sold $10 billion in three-month bills at a discount rate of 5.03%, up from 4.995% last week. An additional $8 billion was sold in six-month bills at a rate of 5.12%, up from 5.09%. The three-month rate was the highest since May 18, 1998, when the bills sold for 5.08%. The six-month rate was the highest since June 8, 1998, when the rate was 5.155%. The new discount rates understate the actual return to investors--5.177% for three-month bills, with a $10,000 bill selling for $9,874.30, and 5.342% for a six-month bill selling for $9,742.60. 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, fell to 5.45% last week from 5.51% the previous week.