Short-term T-bill rates fall in auction

The Treasury Department auctioned $13 billion in three-month bills at a discount rate of 4.785%, down from 4.835% last week. An additional $12 billion in six-month bills was auctioned at a discount rate of 4.820%, down from 4.835% last week.

The new discount rates understate the actual return to investors -- 4.924% for three-month bills, with a $10,000 bill selling for $9,879.05, and 5.023% for a six-month bill selling for $9,756.32.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 4.90% last week from 4.93% the previous week.