T-Bill Rates Rise to Highest Since June 1998

The Treasury Department sold $10 billion in three-month bills at a discount rate of 4.995%, up from 4.990% last week, and $8 billion in six-month bills at 5.115%, up from 5.000%. The three-month rate is the highest since June 15, 1998, when the bills sold for 5.010%. The six-month rate is the highest since June 22, 1998, when it was 5.120%. An auction of two-year notes is scheduled tentatively for Wednesday. The new discount rates understate the actual return to investors--5.145% for three-month bills, with a $10,000 bill selling for $9,873.70, and 5.338% for a six-month bill selling for $9,741.40. 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 5.47% last week from 5.42% the week before.