Rates on Short-Term Treasuries Climb

The Treasury Department sold $7.5 billion in three-month Treasury bills at a discount rate of 5.560%, up from 5.385% last week. It sold $6.5 billion in six-month bills at a rate of 5.705%, up from 5.520%. The three-month rate is the highest since June 12, 1995, when the bills sold for 5.57%. The six-month rate is the highest since that date as well, when the rate was 5.72%. The new discount rates understate the actual return to investors--5.731% for three-month bills, with a $10,000 bill selling for $9,859.50, and 5.972% for a six-month bill selling for $9,711.60. Auctions are scheduled tentatively for Feb. 23 for two-year notes, Feb. 8 for five-year notes, Feb. 9 for 10-year notes and Feb. 10 for 30-year bonds. 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 6.17% last week from 6.13% the previous week.