Short-Term Rates Hit Three-Year Highs

The Treasury Department auctioned $21 billion in three-month bills at a discount rate of 1.95%. It auctioned $19 billion in six-month bills at 2.14%.

The three-month rate was up from 1.855% last week and was the highest since Nov. 5, 2001, when it was 1.975%. The six-month rate was up from 2.04% last week and was the highest since Oct. 15, 2001, when it was 2.16%.

The new rates understate the actual return to investors -- 1.987% for three-month bills, with a $10,000 bill selling for $9,950.71, and 2.193% for a six-month bill selling for $9,891.81.

In a separate report, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 2.27% last week from 2.22% the previous week.