Rate Rises on Three-Month Treasury Bills

The Treasury Department sold $8.5 billion in three-month bills at a discount rate of 5.9%, up from 5.83% last week. An additional $7.5 billion was sold in six-month bills at a rate of 5.945%, down from 5.975%. The new discount rates understate the actual return to investors--6.071% for three-month bills with a $10,000 bill selling for $9,850.90 and 6.215% for a six-month bill selling for $9,699.40. An auction of two-year notes is scheduled tentatively for July 16. In a separate report, the Federal Reserve said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, fell to 6.08% last week from 6.13% the previous week.