Rates Drop on Short-Term Treasury Bills

The Treasury Department sold $10 billion in three-month bills at a discount rate of 4.710%, down from 4.905% last week. An additional $10 billion was sold in six-month bills at a rate of 4.495%, down from 4.770%. The three-month rate was the lowest since Sept. 20, 1999, when the bills sold for 4.660%. The six-month rate was the lowest since July 19, 1999, when the rate was 4.490. The new discount rates understate the actual return to investors--4.835% for three-month bills, with a $10,000 bill selling for $9,880.90, and 4.662% for six-month bills selling for $9,772.80. 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, fell to 4.690% last week from 4.800% the previous week.