A brief period of lower, short-term interest rates was halted abruptly yesterday as interest rates soared on Treasury bills. Interest costs to the government, as measured by weekly Treasury auctions of 13-week and 26-week bills, rose substantially after three declines in the previous four weeks. The government also paid a record interest rate for 20-year, 1-month bonds.
The average discount rate on 13-week bills rose to 14.669 percent from 14.198 percent on Sept. 21. The equivalent coupon-issue yield was 15.45 percent compared with 14.93 percent at the previous bill auction.
For 26-week bills, the discount rate was up to 14.932 percent from 14.129 percent. Equivalent coupon-issue yields rose to 16.38 percent from 15.43 percent a week ago. All of the interest rates were the highest since Sept. 4. The Treasury sold $4.5 billion each of the 13-week and 26-week bills; the auction held yesterday had been postponed from Monday and the bills will have yesterday's date.
The Treasury also sold $1.75 billion of 20-year, 1-month bonds at a 15.78 percent yield, surpassing the previous record of 13.45 percent on June 25. The coupon interest rate is 15 3/4 percent.
Beginning today, banks and savings and loans may pay as much as 15.182 percent on six-month money market certificates, up from the previous 14.379 percent. Interest on the $10,000 minimum deposits is limited to one-quarter point above six-month T-bills.