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

The Treasury Department sold $7.2 billion in new three-month bills at an average discount rate of 6.15%, down from 6.22% last week. Another $7.2 billion was sold in new six-month bills at an average discount rate of 6.21%, down from 6.28% last week. The new discount rates understate the actual return to investors--6.34% for three-month bills and 6.50% for six-month bills. The discount rate reflects the price discount received when government securities are purchased at less than face value. In a separate report, the Federal Reserve said the average yield for one-year T-bills was 6.74% last week, up from 6.65% the week before.