Interest Rates Rise in T-Bill Auction

The Treasury Department sold $19 billion in three-month bills at a discount rate of 2.195%, up from 2.155% last week. An additional $17 billion was sold in six-month bills at a rate of 2.395%, up from 2.365%.

The three-month rate was the highest since Oct. 15, 2001, when the bills sold at 2.2%. The six-month rate was the highest since Sept. 17, 2001, when the rate was 2.57%.

The new discount rates understate the actual return to investors -- 2.238% for three-month bills, with a $10,000 bill selling for $9,944.52 and 2.458% for a six-month bill selling for $9,878.92.

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 2.6% last week from 2.53% the previous week.