Interest Rates Rise in Treasury Bill Auction

The Treasury Department sold $17 billion in three-month bills at a discount rate of 0.94%, up from 0.92% last week. An additional $17 billion was sold in six-month bills at a rate of 1.02%, up from 1.015%.

Both the three-month and six-month rates were the highest since Sept. 2, when the bills sold for 0.97% and 1.04%, respectively.

The new discount rates understate the actual return to investors -- 0.96% for three-month bills with a $10,000 bill selling for $9,976.20 and 1.043% for a six-month bill selling for $9,948.40.

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 1.3% from 1.29% the previous week.