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Interest rates on short-term T-bills rose sharply.

June 03, 1986

The Treasury Department sold $7 billion in new three-month bills at an average discount rate of 6.33%, up from 6.15% last week. Another $7 billion in new six-month bills was sold at at an average discount rate of 6.41%, up from 6.21% last week. The rates were the highest since March 31, when three-month bills sold for 6.35%, and since March 24, when six-month bills averaged 6.43%. The new discount rates understate the actual return to investors--6.52% for three-month bills and 6.72% for six-month bills. The discount rate reflects the price discount received when government securities are purchased at less than face value.

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