Interest Rates Mixed on Short-Term T-Bills

The Treasury Department sold $12.6 billion in three-month bills at an average discount rate of 5.02%, down from 5.08% last week. Another $12.6 billion was sold in six-month bills at an average rate of 5.11%, unchanged from last week. The three-month bill rate was the lowest since they sold for 4.92% on Dec. 23. The six-month bill rate was the highest since they averaged 5.15% on Oct. 28. The new discount rates understate the actual return to investors--5.16% for three-month bills with a $10,000 bill selling for $9,873.10 and 5.32% for a six-month bill selling for $9,741.70. 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 5.55% last week from 5.50% the previous week. The next auction of two-year notes will be Jan. 21; five-year notes on Jan. 22.