Interest Rates Up in Treasury Auction

The Treasury Department sold $17 billion in three-month bills at a discount rate of 0.97%, up from 0.935% last week. It sold an additional $14 billion in six-month bills at 1.165%, up from 1.08%.

The three-month rate was the highest since Aug. 25, 2003, when the bills sold for 0.98%. The six-month rate was the highest since April 21, 2003, when it was 1.185%.

The rates understate the actual return to investors -- 0.985% for three-month bills, with a $10,000 bill selling for $9,975.50, and 1.188% for a six-month bill selling for $9,941.10.

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 1.5% last week from 1.41% the previous week.