3-Month T-Bill Rates Fall, 6-Month Rates Rise

The Treasury Department sold $9 billion in three-month bills at a discount rate of 5.105%, down from 5.115% last week. An additional $8 billion was sold in six-month bills at a rate of 5.235%, up from 5.215%. The three-month rate is the lowest since Nov. 8, when the bills sold for 5.030%. The six-month rate is the highest since Dec. 29, 1997, when the rate was 5.285%. The new discount rates understate the actual return to investors--5.256% for three-month bills, with a $10,000 bill selling for $9,872.40, and 5.466% for a six-month bill selling for $9,736.80. 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 5.56% last week from 5.50% the previous week. The next auction of two-year notes will be today; for one-year notes, Dec. 7.