Interest rates on short-term Treasury bills rose in Monday's auction with rates on three-month Treasury bills rising to the highest level in two years.

The Treasury Department auctioned $35 billion in three-month bills at a discount rate of 0.125 percent, up from 0.115 percent last week. Another $30 billion in six-month bills was auctioned at a discount rate of 0.135 percent, up from 0.130 percent last week.

The three-month rate was the highest since three-month bills averaged 0.145 percent on Feb. 28, 2011. The six-month rate was the highest since those bills averaged 0.140 percent on Dec. 3.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,996.84 while a six-month bill sold for $9,993.18. That would equal an annualized rate of 0.127 percent for the three-month bills and 0.137 percent for the six-month bills.

Separately the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 0.17 percent last week from 0.15 percent the previous week.