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Interest rates in T-bill auction hit highest level in 5 years

WASHINGTON -- Interest rates on short-term Treasury bills rose in yesterday's auction to the highest levels in five years.

The Treasury Department auctioned $20 billion in three-month bills at a discount rate of 4.440 percent, up from 4.375 percent last week. Another $17 billion in six-month bills was auctioned at a discount rate of 4.540 percent, up from 4.500 percent last week.

The three-month rate was the highest since those bills averaged 4.520 percent on March 12, 2001. The six-month rate was the highest since 4.770 percent on Feb. 20, 2001.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,887.77 while a six-month bill sold for $9,770.48.

Separately, the Federal Reserve said yesterday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 4.67 percent last week from 4.60 percent the previous week.

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