Short-Term Rates Rise in T-Bill Auction

The Treasury Department sold $16 billion in three-month bills at a discount rate of 1.660%, up from 1.645% last week. An additional $13 billion was sold in six-month bills at a rate of 1.640%, up from 1.635%.

Both the three-month and six-month rates were the highest since July 29, when the bills sold for 1.680% and 1.690%, respectively.

The new discount rates understate the actual return to investors--1.692% for three-month bills with a $10,000 bill selling for $9,958 and 1.676% for a six-month bill selling for $9,917.10.

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--rose to 1.78% last week from 1.70% the previous week.