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YIELDS ON TREASURY BILLS RISE
TO HIGHEST LEVEL IN OVER 3 YEARS

Interest rates on short-term Treasury bills rose in Monday's auction to the highest levels in more than three years as congressional leaders planned for a midweek vote to raise the government's borrowing limit.

The Treasury Department auctioned $19 billion in three-month bills at a discount rate of 2.075 percent. Another $17 billion in six-month bills was auctioned at a discount rate of 2.280 percent.

The three-month rate was up from 2.045 percent last week and was the highest since three-month bills averaged 2.170 percent on Oct. 22, 2001.

The six-month rate was up from 2.260 percent last week and was the highest since 2.325 percent on Oct. 1, 2001.

The new discount rates understate the actual return to investors -- 2.115 percent for three-month bills with a $10,000 bill selling for $9,947.55, and 2.339 percent for a six-month bill selling for $9,884.73.

In a separate report, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 2.47 percent last week from 2.35 percent the previous week. The Treasury Department announced Monday that it was postponing its regular auction of four-week bills because Congress has not yet raised the limit on the national debt.

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