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YIELDS INCREASE ON T-BILLS

Interest rates on short-term Treasury securities rose in Monday's auction to their highest level since October.

The Treasury Department sold $7.7 billion in three-month bills at an average discount rate of 7.77 percent, up from 7.66 percent last week. Another $7.6 billion was sold in six-month bills at an average discount rate of 7.73 percent, up from 7.58 percent last week.

The new discount rates understate the actual return to investors -- 8.04 percent for three-month bills with a $10,000 bill selling for $9,803.60 and 8.16 percent for a six-month bill selling for $9,609.20.

In a separate report, the Federal Reserve said Monday the average yield for one-year Treasury bills, the most popular index for making changes in adjustable rate mortgages, rose to 8.01 percent last week from 7.97 percent the previous week.

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