Interest Rates Fall in Treasury Bill Auction

The Treasury Department sold $9 billion in three-month bills at a discount rate of 4.2%, down from 4.37% last week. An additional $8 billion was sold in six-month bills at a rate of 4.12%, down from 4.22%. The new discount rates understate the actual return to investors--4.305% for three-month bills, with a $10,000 bill selling for $9,893.80, and 4.266% for a six-month bill selling for $9,791.70. 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 4.17% last week from 4.31% the week before.