Short-term T-bill rates fall

WASHINGTON -- Interest rates on short-term Treasury securities fell in yesterday's auction.

The Treasury Department sold $17 billion in three-month bills at a discount rate of 1.32 percent, down from 1.39 percent last week.

An additional $15 billion was sold in six-month bills at a rate of 1.68 percent, down from 1.72 percent. Both the three-month and six-month rates were the lowest since June 7, when the bills sold for 1.23 percent and 1.51 percent, respectively.

The new discount rates understate the actual return to investors:

1.34 percent for three-month bills with a $10,000 bill selling for $9,966.80 and 1.71 percent for a six-month bill selling for $9,915.30.

Separately, the Federal Reserve said the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable rate mortgages, rose to 2.22 percent last week, from 2.07 percent the previous week.