Rates on short-term T-bills decline in auction

The Treasury Department auctioned $17 billion in three-month bills at a discount rate of 4.975%, down from 4.990% last week. An additional $15 billion in six-month bills was auctioned at a discount rate of 4.955%, down from 4.975% last week.

The new discount rates understate the actual return to investors -- 5.108% for three-month bills, with a $10,000 bill selling for $9,874.24, and 5.153% for a six-month bill selling for $9,749.50.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 5.07% last week from 5.05% the previous week.