3-Month Treasury Bills Hit 5-Year High

The Treasury Department sold $8.5 billion in three-month bills at a discount rate of 5.78%, up from 5.73% last week. An additional $7.5 billion was sold in six-month bills at a rate of 5.895%, up from 5.86%. The three-month rate was the highest since Feb. 13, 1995, when the bills sold for 5.82%. The six-month rate was the highest since April 3, 1995, when the rate was 5.90%. The new discount rates understate the actual return to investors--5.947% for three-month bills, with a $10,000 bill selling for $9,853.90, and 6.160% for a six-month bill selling for $9,702. Separately, 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 6.20% last week from 6.18%.