Interest Rates Mixed in Treasury Bill Auction

The Treasury Department sold $10 billion in three-month bills at a discount rate of 4.995%, unchanged from last week’s rate, which had been the highest since June 15, 1998. An additional $8 billion was sold in six-month bills at a rate of 5.090%, down from 5.115%. The six-month rate is the lowest since Oct. 18, when the rate was 5.000%. The new discount rates understate the actual return to investors--5.145% for three-month bills, with a $10,000 bill selling for $9,873.70, and 5.311% for a six-month bill selling for $9,742.70. An auction of two-year notes is tentatively scheduled for Nov. 23. 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, rose to 5.51% last week from 5.47% the week before.