Rates Slip on 3-Month, 6-Month Treasuries

The Treasury Department sold $12.5 billion in three-month bills at a discount rate of 3.59%, down from 3.605% last week. An additional $10.5 billion was sold in six-month bills at a rate of 3.52%, down from 3.55%.

The three-month rate was the lowest since May 21, when the bills sold for 3.54%. The six-month rate was the lowest since Feb. 14, 1994, when the rate was 3.43%.

The new discount rates understate the actual return to investors--3.671% for three-month bills, with a $10,000 bill selling for $9,909.30, and 3.634% for a six-month bill selling for $9,822.

In a separate report, the Federal Reserve said the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable-rate mortgages, fell to 3.70% last week from 3.78% the previous week.