T-Bill Rates Rise to Highest Level Since ’97

Interest rates on short-term Treasury securities rose to their highest point since 1997. The Treasury Department sold $9 billion in three-month bills at a discount rate of 5.200%, up from 5.105% last week. An additional $8 billion was sold in six-month bills at a rate of 5.330%, up from 5.235%. The three-month rate was the highest since Dec. 29, 1997, when the bills sold for 5.285%. The six-month rate was the highest since May 19, 1997, when the rate was 5.350%. The new discount rates understate the actual return to investors--5.355% for three-month bills, with a $10,000 bill selling for $9,868.60, and 5.570% for a six-month bill selling for $9,730.50. The next auction of two-year notes will be Dec. 22. 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 5.65% last week from 5.56% the previous week.