Treasury Bill Rates Rise at Auction

The Treasury Department sold $8.5 billion in three-month bills at a discount rate of 4.73%, up from 4.72% last week. An additional $7.5 billion was sold in six-month bills at a rate of 4.87%, up from 4.81%. The three-month rate is the highest since Aug. 30, when the bills returned 4.875%. The six-month rate is the highest since Sept. 20, when the rate was 4.89%. The new discount rates understate the actual return to investors--4.869% for three-month bills, with a $10,000 bill selling for $9,880.40, and 5.076% for a six-month bill selling for $9,753.80. 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 5.24% last week from 5.23% the week before. The next auction of 29 1/2-year inflation-indexed notes is scheduled for Wednesday; an auction of two-year notes is scheduled for Oct. 27.