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Treasury bill rates decline

WASHINGTON -- Interest rates on short-term Treasury bills fell in yesterday's auction to the lowest levels in two weeks.

The Treasury Department auctioned $15 billion in three-month bills at a discount rate of 2.870 percent, down from 2.880 percent last week. Another $13 billion in six-month bills was auctioned at a discount rate of 3.085 percent, down from 3.090 percent last week.

Both rates were the lowest since April 18 when the three-month bill was at 2.805 percent and the six-month bill was at 3.040 percent.

The new discount rates understate the actual return to investors -- 2.931 percent for three-month bills with a $10,000 bill selling for $9,927.45 and 3.177 percent for a six-month bill selling for $9,844.04.

In a separate report, the Federal Reserve said yesterday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 3.33 percent last week from 3.28 percent the previous week.

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