Short-Term Rates Up in T-Bill Auction

The Treasury Department sold $18 billion in three-month bills at a discount rate of 1.05%, up from 1.04% last week. It sold $15 billion in six-month bills at 1.375%, up from 1.335%.

The three-month rate was the highest since May 10, when the bills sold for 1.06%. The six-month rate was the highest since Nov. 4, 2002, when it was 1.395%.

The rates understate the actual return to investors -- 1.066% for three-month bills, with a $10,000 bill selling for $9,973.50, and 1.404% for a six-month bill selling for $9,930.10.

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, was 1.83% last week, unchanged from the previous week.