Interest Rates Mixed in Treasury Auction

The Treasury Department sold $16 billion in three-month bills at a discount rate of 0.94%, down from 0.945% last week. An additional $16 billion was sold in six-month bills at 1.03%, up from 1.025%.

The three-month rate was the lowest since July 21, when the bills sold for 0.895%. The six-month rate was the highest since June 2, when the rate was 1.095%.

The new discount rates understate the actual return to investors -- 0.960% for three-month bills, with a $10,000 bill selling for $9,976.20, and 1.053% for a six-month bill selling for $9,947.90.

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 1.26% last week from 1.22% the previous week.

From Associated Press