Interest Rates Fall on Short-Term T-Bills

The Treasury Department sold $8.5 billion in three-month bills at a discount rate of 5.690%, down from 5.775% last week. An additional $7.5 billion was sold in six-month bills at a rate of 5.920%, down from 6.005%. The new discount rates understate the actual return to investors--5.852% for three-month bills, with a $10,000 bill selling for $9,856.20, and 6.188% for a six-month bill selling for $9,700.70. An auction of two-year notes is scheduled tentatively for June 28. In a separate report, the Federal Reserve said that the average yield for one-year Treasury bills, the most popular index for making changes in adjustable rate mortgages, fell to 6.14% last week from 6.23% the previous week.