Originally created 02/17/99

Interest rates rise in Treasury auction



WASHINGTON -- Interest rates on short-term Treasury securities rose in Tuesday's auction to the highest level in seven weeks.

The Treasury Department sold $7.51 billion in three-month bills at a discount rate of 4.440 percent, up from 4.420 percent last week. An additional $7.5 billion was sold in six-month bills at a rate of 4.470 percent, up from 4.420 percent.

The rates were the highest since Dec. 28, when three-month bills sold for 4.520 percent and the six-month rate was 4.525 percent.

The new discount rates understate the actual return to investors -- 4.551 percent for three-month bills with a $10,000 bill selling for $9,887.80 and 4.637 percent for a six-month bill selling for $9,774.00.

In a separate report, the Federal Reserve said Tuesday that the average yield for one-year Treasury bills, the most popular index for making changes in adjustable rate mortgages, rose to 4.67 percent last week from 4.61 percent the previous week.