Short-Term Rates Up in Treasury Auction

The Treasury Department sold $16 billion in three-month bills at a discount rate of 0.935%, up from 0.915% last week. It also sold $13 billion in six-month bills at 1.08%, up from 1.025%.

The three-month rate was the highest since March 29, when the bills sold for 0.945%. The six-month rate was the highest since June 2, 2003, when it was 1.095%.

The new rates understate the actual return to investors -- 0.949% for three-month bills, with a $10,000 bill selling for $9,976.40, and 1.101% for a six-month bill selling for $9,945.40.

In a separate report, the Federal Reserve said the average yield for one-year constant-maturity Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 1.41% last week from 1.32% the previous week.