BANKING & FINANCE - Aug. 27, 1996

Rates Rise on Short-Term T-Bills: The Treasury Department sold $12 billion in three-month bills at an average discount rate of 5.07%, up from 5.06% last week. Another $12 billion was sold in six-month bills at an average rate of 5.16%, up from 5.13%. The three-month bill rate was the highest since they sold for 5.08% on Aug. 5. The six-month bill rate was the highest since they averaged 5.34% on July 29. The new discount rates understate the actual return to investors: 5.21% for three-month bills, with a $10,000 bill selling for $9,870.40, and 5.37% for a six-month bill selling for $9,739.10. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills rose to 5.64% last week from 5.62% the previous week. The next auctions of two-year notes and five-year notes will be today and Wednesday, respectively. Because of the Labor Day holiday Monday, the next auctions of three- and six-month bills will be next Tuesday.

T-Bill Auction (Aug. 26)

6-month: 5.16% 3-month: 5.07%