Interest Rates Rise at Treasury Auction

The Treasury Department sold $18 billion in three-month bills at a discount rate of 1.13%, up from 1.05% last week. It sold $15 billion in six-month bills at 1.4%, up from 1.375%.

The three-month rate was the highest since April 21, 2003, when the bills sold for 1.16%. The six-month rate was the highest since Oct. 28, 2002, when it was 1.515%.

The new rates understate the actual return to investors -- 1.15% for three-month bills, with a $10,000 bill selling for $9,971.40, and 1.43% for a six-month bill selling for $9,929.20.

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 1.82% last week from 1.83% the previous week.