Short-Term Rates Up in Treasury Auction

The Treasury Department sold $21 billion in three-month bills at a discount rate of 1.855%, up from 1.77% last week. It sold $19 billion in six-month bills at 2.04%, up from 1.99%.

The three-month rate was the highest since Nov. 26, 2001, when the bills sold for 1.92%. The six-month rate was the highest since April 1, 2002, when it was 2.11%.

The new rates understate the actual return to investors -- 1.89% for three-month bills, with a $10,000 bill selling for $9,953.11, and 2.09% for a six-month bill selling for $9,896.87.

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 2.22% last week from 2.18%.