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Interest rates on short-term Treasury bills rose in Monday's auction to the highest levels since September 2001.

The Treasury Department auctioned $16 billion in three-month bills at a discount rate of 2.88 percent, up from 2.805 percent last week.

Another $14 billion in six-month bills was auctioned at a discount rate of 3.09 percent, up from 3.04 percent last week.

The new discount rates understate the actual return to investors -- 2.941 percent for three-month bills with a $10,000 bill selling for $9,927.20, and 3.183 percent for a six-month bill selling for $9,843.78.

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, edged down to 3.28 percent last week from 3.32 percent the previous week.