Short-Term Treasury Yields Hit New Highs

The Treasury Department sold $8.5 billion in three-month bills at a discount rate of 6.065%, up from 6.020% last week. An additional $7.5 billion was sold in six-month bills at a rate of 6.250%, up from 6.150%. The three-month rate was the highest since March 4, 1991, when the rate was 6.090%. The six-month rate was the highest since Jan. 9, 1995, when it was 6.420%. The new discount rates understate the actual return to investors--6.245% for three-month bills, with a $10,000 bill selling for $9,846.70 and 6.544% for a six-month bill selling for $9,684. An auction of two-year notes is tentatively scheduled for May 24. 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 6.38% last week from 6.24% the previous week.