Interest Rates Rise in Treasury Bill Auction

The Treasury Department sold $19 billion in three-month bills at a discount rate of 1.71%, up from 1.685% last week. It sold an additional $17 billion in six-month bills at 1.95%, up from 1.87%.

The three-month rate was the highest since June 10, 2002, when the bills sold for 1.72%. The six-month rate was the highest since April 8, 2002, when it was 1.975%.

The new discount rates understate the actual return to investors -- 1.741% for three-month bills, with a $10,000 bill selling for $9,956.78, and 1.997% for a six-month bill selling for $9,901.42.

In a separate report, the Federal Reserve said the average yield for one-year constant-maturity Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 2.14% last week from 2.09% the previous week.