Interest Rates Rise in Treasury Auction

The Treasury Department sold $19 billion in three-month bills at a discount rate of 1.515%, up from 1.47% last week. It sold $17 billion in six-month bills at 1.75%, up from 1.725%.

The three-month rate was the highest since Oct. 28, 2002, when the bills sold for 1.55%. The six-month rate was the highest since June 24, 2002, when it was 1.765%.

The new rates understate the actual return to investors -- 1.541% for three-month bills, with a $10,000 bill selling for $9,961.30, and 1.791% for a six-month bill selling for $9,911.50.

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, fell to 1.98% last week from 1.99% the previous week.