Treasury bill rates higher

WASHINGTON -- Interest rates on short-term Treasury bills rose in yesterday's auction to the highest levels in nearly four years.

The Treasury Department auctioned $17 billion in three-month bills at a discount rate of 2.975 percent, up from 2.965 percent last week. Another $15 billion in six-month bills was auctioned at a discount rate of 3.120 percent, up from 3.060 percent last week.

The three-month rate was the highest since three-month bills averaged 3.180 percent on Sept. 10, 2001. The six-month rate was the highest since 3.310 percent on Sept. 4, 2001.

The new discount rates understate the actual return to investors -- 3.039 percent for three-month bills with a $10,000 bill selling for $9,924.80 and 3.214 percent for a six-month bill selling for $9,842.27.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, edged up to 3.30 percent last week from 3.28 percent the previous week.