Short-Term T-Bill Rates Mixed at Auction

The Treasury Department sold $9 billion in three-month bills at a discount rate of 5.67%, up from 5.64% last week. An additional $8 billion was sold in six-month bills at a rate of 5.77%--unchanged from last week’s rate. The three-month rate was the highest since May 22, 1995, when the bills sold for 5.72%. The new discount rates understate the actual return to investors--5.83% for three-month bills, with a $10,000 bill selling for $9,856.70, and 6.02% for a six-month bill selling for $9,708.50. An auction of two-year notes is scheduled tentatively for March 29. Separately, the Federal Reserve said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, inched down to 6.22% last week from 6.23% the week before.