T-Bill Rates at Highest in More Than 3 Years

The Treasury Department auctioned $20 billion in three-month bills at a discount rate of 2.54%, up from 2.48% last week. An additional $17 billion in six-month bills was auctioned at a discount rate of 2.76%, up from 2.71%.

The three-month rate was the highest since they averaged 2.56% on Sept. 17, 2001. The six-month rate was the highest since 3.12% on Sept. 10, 2001.

The new discount rates understate the actual return to investors -- 2.59% for three-month bills with a $10,000 bill selling for $9,935.79 and 2.84% for a six-month bill selling for $9,860.47.

In a separate report, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, edged up to 2.96% last week from 2.95% the previous week.