Short-Term Rates Fall in Treasury Auction

The Treasury Department sold $16 billion in three-month bills at a discount rate of 1.610%, down from 1.660% last week. An additional $13 billion was sold in six-month bills at a rate of 1.580%, down from 1.640%.

Both the three-month and the six-month rates were the lowest since Aug. 5, when the bills sold for 1.600% and 1.555%, respectively.

The new discount rates understate the actual return to investors--1.639% for three-month bills, with a $10,000 bill selling for $9,959.30, and 1.615% for a six-month bill selling for $9,920.10.

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, fell to 1.73% last week from 1.78% the previous week.