BANKING & FINANCE - Oct. 1, 1996

Rates on Short-Term T-Bills Fall: Interest rates on short-term Treasury securities fell in auction. The Treasury Department sold $13.1 billion in three-month bills at an average discount rate of 5.01%, down from 5.18% last week. Another $13.2 billion was sold in six-month bills at an average rate of 5.17%, down from 5.30%. The three-month bill rate was the lowest since they sold for 5.00% on April 29. The six-month bill rate was the lowest since they averaged 5.16% on Aug. 26. The new discount rates understate the actual return to investors: 5.14% for three-month bills, with a $10,000 bill selling for $9,873.40, and 5.38% for a six-month bill selling for $9,738.60. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 5.72% last week from 5.82% the previous week.