Interest Rates Rise in Treasury Bill Auction

The Treasury Department sold $18 billion in three-month bills at a discount rate of 1.685%, up from 1.64% last week. It sold an additional $16 billion in six-month bills at 1.87%, up from 1.84%.

The three-month rate was the highest since July 8, 2002, when the bills sold for 1.695%. The six-month rate was the highest since June 3, 2002, when it was 1.875%.

The new rates understate the actual return to investors -- 1.716% for three-month bills, with a $10,000 bill selling for $9,957.40, and 1.914% for a six-month bill selling for $9,905.46.

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 2.09% last week from 2.1% the previous week.