Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. CONFIDENTIAL (FR) August 19, 1966. MONEY MARKET AND RESERVE RELATIONSHIPS Money markets Recent developments. sharply since late July. Key short-term interest rates have risen Since the Committee's last meeting, the Treasury bill rate has moved up 33 basis points to 5.10 per cent. Some trading in the Federal funds market has been reported at rates as high as 6 per cent, and two short-term Federal Agency issues were marketed this week at 6 per cent yields. Rates on dealer loans posted by New York banks touched a new high of 6-5/8 per cent and CD issuing rates have continued to press against the 5-1/2 per cent ceiling, with secondary market quotations advancing to 5-3/4 per cent and even 6 per cent. The atmosphere of tightness in the money markets was relieved only briefly at the end of recent statement weeks when the Federal funds market eased temporarily and some associated declines in very short-term bill rates occurred. It seems possible that market anticipations, which have been a major factor in the recent sharp advance in various short-term rates, may have somewhat outrun current supply-demand pressures in the money markets. The largest upward adjustments in short-term rates recently have occurred following various announcements, including that of the $3.0 billion tax bill auction, the prime loan rate increase, and the Board's action raising reserve requirements against time deposits. FINANCIAL MARKET RELATIONSHIPS (Monthly averages and, IN PERSPECTIVE ERRATA SHEET FOR BLUE BOOK where available, weekly averages of daily figures; amounts in millions of dollars) Bond Yields Flow of Reserves. Bank Credit and Money ' ' I Federal 3-montl Corporate Munici- NonTotal Bank re u Time Funds Treasborrowed ReCet Money U. S. New pal BorrowFree Credit Deposits Gov't. Issues (Aaa) reserves serves Supply ury Rate ings Reserves Proxy Bill 20 yr.) 1/ (Aaa) '' (New Series) .' -176 4.01 + 87 +174 +1,300 +1,800 4.21 4.58 +1,802 534 3.80 3.15 Money Market Indicators Period ' 1965--June July Aug. Sept Oct. Nov. Dec. -178 -162 -139 -132 - 77 - 22 527 549 552 490 418 452 4.07 4.11 3.95 4.05 4.09 4.28 3.83 3.84 3.92 4.02 4.08 4.37 4.21 4.25 4.30 4.32 4.40 4.50 4.61 4.63 4.67 4.69 4.72 4.85 3.16 3.16 3.25 3 .J1 3.34 3.39 - 51 -117 -210 -277 -339 -352 -365 431 474 545 638 653 722 739 4.32 4.58 4.64 4.64 4.83 5.13 5.18 4.58 4.65 4.58 4.61 4.63 4.50 4.78 4.52 4.71 4.72 4.65 4.69 4.73 4.84 4.81 4.96 5.09 5.03 5.16 5.35 5.48 3.39 3.48 3.55 3.46 3.53 3.60 3.77 6 13 20 27 -477 - 94 -460 -429 827 818 631 680 5.25 5.38 4.48 5.45 4.64 4.75 4.91 4.78 4.82 4.84 4.86 4.83 3 10 -434 -301 778 782 -466 730 4.77 4.82 i5 00 4.86 4.86 17 5.58 5.70 5.15 1966--Jan. Feb. Mar. Apr. May June July p July Aug. "' 4.90 5.49 5.47 5.56 4 75 + 73 + 89 + 27 - 73 - 14 - 26 + 68 +1,414 +1,608 + 249 +2,592 + 3 + 759 +270 S+2,147 + 700 + 200 +1,600 +1,300 + 100 +1,700 +1,700 +2,500 +1,500 +2,000 +1,900 +1,500 +165 +115 +1,793 +1,000 + 58 - 97 + 81 + 45 + - +205 - 5 +255 + 1 - 33* + 82* +194 * +2,110* +1,000 + 800 + 800 +2,000 +1,300 +1,200* +1,600* +132 + 84 +191 107 1965 - 90 Recent variations in growth Dec. 1-Mar. 16 -111 -299 Mar. 16-June 1 -368 June 1-Aug. 17 Dec. 1-Aug. 17 -243 + 787 +3,587 + 465 - 14* + 970* 400 +1,200 +1,900 -1,600 +1,600 500 3.77 3.77 3.77 3.78 +1,661 + - 390 305 -1,600 + 100 + 184 -1,000 3.79 3.87 3-94 - 364 + + 253 129 -1,100 +1.200 Averages Year 1964 820 600 500 500 700 500 400 + + + 300 400 600 Annual rates of increase 2 / 295 3.47 3.53 4.19 4.44 3.09 + 4.5 + 4.2 4-7.6 + 4.3 +12.8 467 4.05 3.95 4.27 4.58 3.16 + 4.3 + 5.3 + 9.1 + 4.8 +16.1 464 644 731 4.43 4.72 5.31 4.55 4.61 4.69 4.55 4.61 4.81 5.01 5.17 5.50 3.46 3.50 3.74 + 5.8 + 8.1 c + 5.6 + 7.3 - 0.8 + 1.1 + 7.3 +13.0 +13.2 597 4.78 4.61 4.68 5.17 3.55 c + 6.5 + 3.0 +10.7 all commercial banks. Base is average for month preceding specified period or in the case of weekly periods, the first week shown. * Changes have been adjusted for redefinition of time deposits effective June 9. p-Preliminary. August 19, 1966. Time deposits adjusted at + + + + CONFIDENTIAL (FR) - 2 - August 19, 1966 Nevertheless, the cumulative impact of underlying supply-demand pressures has also contributed to higher yields. Net borrowed reserves have fluctuated in a $300 - $465 million range in recent weeks and in the three statement weeks since July 27 have averaged $400 million, up from $365 million in the previous 4 weeks. Member bank borrowings have averaged about $765 million since late July, some $25 million above their average for the previous month. Prospective developments. Probably the most critical factor in the immediate outlook for money and capital market developments, aside from the general uncertainty afflicting markets, is the shape of bank portfolio adjustments that may be undertaken in preparation for mid-September pressures arising from possible CD run-offs, the reserve requirement increase, and prospects for heavy tax-date and other loan demands. These anticipatory adjustments could include, for example, bank liquidation of intermediate-term Government securities, Agency issues and/or municipal securities, and a temporary reinvestment in short-term uses, such as Federal funds and very short Treasury bills. Such adjustments by banks -- and similar portfolio switches by other investors -- could produce diverging interest rate movements, quite apart from any changes in marginal reserve availability or actual CD run-offs that might develop before the tax date. In consequence of such adjustments, Treasury bill rates would probably rise less than other short-term rates, and could decline in the absence of new psychological shocks to the market. This assessment CONFIDENTIAL (FR) - 3 - August 19, 1966 assumes peak pressures on money market banks will not occur before the September tax and dividend period, when the new reserve requirements on time deposits are also scheduled to go into effect. Further, pressures that might arise in the bill market from bank sales of March and April tax bills should be relieved to some extent by large System purchases in late August and early September. On the basis of current projections, these purchases could aggregate between $1 and $1-1/4 billion, although a failure to settle the airline strike would increase float above the levels assumed in the projections and cut back the System's purchases. Finally, the short bill market probably will benefit from CD liquidations by liquidity-sensitive corporations and other investors. Over the three-week interval until the next meeting of the Committee, therefore, yields on 3-month bills could drift downward from the 5.10 - 5.15 per cent level, assuming that net borrowed reserves 1/ range around $450 million. Under these circumstances, the Federal funds market would be subjected to conflicting interests, as pressures develop in some parts of the banking system while others are accumulating precautionary liquidity. The fund rate, therefore, may fluctuate widely from day to day, probably in a range of from 5-1/2 to over 6 per cent. But other money market rates -- including those on longer bills -- could well continue to work higher. And intermediate maturities probably will continue to face very difficult market conditions, especially 1/ Exclusive of any additional adjustment assistance credits discussed in the draft memorandum on coordination of discount administration distributed to the Committee separately. - 4 - CONFIDENTIAL (FR) August 19, 1966 if there are additional sales of participation certificates. There exists the possibility of discontinuities developing in the pattern of rate movements for particular issues from time to time. If monetary policy moves in the direction of gradually increased firmness in money market conditions (one reflection of which would be 2/ net borrowed reserves ranging upwards from $500 million ), markets would be affected both by the ensuing tighter bank positions and by the impact of the deeper net reserve figures on market psychology. Under these conditions 3-month bill rates would be expected to move generally higher, perhaps within a 5.00 - 5.25 per cent range, and associated yields on other money market instruments probably would be correspondingly higher. Federal fund and dealer loan rates would undoubtedly reach new highs (perhaps as high as 6-1/2 and 7 per cent, respectively) toward the end of the period, as tax, dividend, and reserve requirement pressures begin to converge. Under either monetary policy assumption, the Staff believes that long-term interest rates will rise further in the period ahead. Heavy capital market financing prospects, the expected further loss of bank support for municipals, and widespread anticipations of tighter monetary policy and substantial CD run-offs point to significantly higher yields in all sectors of the long-term market. The potential for cumulating CD run-offs at the major banks, in fact, poses problems in interpreting current money market statistics. Given current rate relationships, such run-offs could commence at any 2/ See footnote 1 on page 3. CONFIDENTIAL (FR) - 5 - August 19, 1966 time, but are likely to be most marked during the September tax and dividend period. And if hard-hit banks borrow temporarily from the Federal Reserve to meet such run-offs in a period of increasing loan demands, the resulting bulge in member bank borrowings would complicate open market operations. Maintaining a given net borrowed reserve target under such circumstances would result in large amounts of total reserves In being supplied and also a significant redistribution of reserves. this process, net reserve positions would be eased for banks not suffering CD run-offs, and some money market rates might move lower. To avoid such easing tendencies, it would be necessary to absorb by open market sales a major portion of the reserves provided through the discount window, even in the face of deepened net borrowed reserve figures. The developments outlined in the preceding paragraph would follow whether or not the proposed additional assistance program is put into operation, but the operation of the program would likely produce larger and longer-lived borrowing by the hard-hit banks and consequently require more offsetting open market operations to counter easing tendencies in some money market rates. The alternative policy of allowing net borrowed reserves to rise more or less in line with member bank borrowings could have a sharp psychological effect on market attitudes and market rates. This effect might be moderated if it were understood that the change represented a deliberate shift in reserve management practices, toward providing more of the needed expansion in aggregate reserves through borrowing relative - 6 - CONFIDENTIAL (FR) to open market operations. August 19, 1966 To the extent that it proves possible to distinguish between "regular" and "special program" borrowings, it may be possible to retain the net borrowed reserve concept (in adjusted form) as a useful indicator of marginal reserve pressures. Reserve flows, bank credit, and money Recent developments. Daily average deposit figures now avail- able for all of July indicate slightly smaller growth in bank credit than estimated in the last Blue Book. Nevertheless, a 10 per cent annual rate of growth was posted for the month, despite persistent downward drift in the weekly figures following sharp expansion in late June and early July. The moderation in growth of member bank deposits shown by the weekly figures has continued through mid-August, and appears to have been balanced on the asset side by greater than normal repayments of security and finance company loans, continued bank sales of U.S. Governments, and most recently, a considerable weakening in business loan expansion, especially at New York City banks. These tendencies reflect in part the short-term nature of June tax-period borrowing, and also the shifting of corporate withholding tax payments from August to July and June. It should be pointed out, however, that the average deposit figures probably significantly understated average expansion in bank credit in July and early August. In this period, U.S. banks borrowed over $900 million of existing dollar deposits from their foreign branches, a development which was not necessarily offset by lower CONFIDENTIAL (FR) deposits in the United States. August 19, 1966 - 7 - Such borrowing, if added to domestic deposit expansion, would have raised the bank credit growth estimates by about two percentage points (annual rate) over the last six or seven weeks. Movements of funds between private and U.S. Government demand deposits were unusually large in July and in the first half of August. Since late June, when large corporations began accelerating payments of employee withholding taxes to the Treasury, the weekly deposit have shown relatively large week-to-week shifts. data On balance, however, private demand deposits have declined moderately over this period. Time deposits grew more rapidly in July than in the preceding two months, and weekly estimates through August 17 indicate only a slight reduction from the July rate. Most of this strength in time deposit expansion has been in the country banks, which apparently are less exposed to competition from the money market. In the latest week ending August 17, however, reserve city banks reported a large increase in total time and savings deposits, probably reflecting some success in advance funding of the heavy September CD maturities. Total reserves increased about 9 per cent in July following 3/ little change in May and June. Nonborrowed and required reserves both increased less than total reserves, as excess reserves and borrowings increased, in part because of the effect of the airline strike on float and on the distribution of reserves. 3/ The aggregate reserve series have been revised to take account of the change in requirements in July and of changes in seasonal factors. August 19, 1966 - 8 - CONFIDENTIAL (FR) Prospective developments. Projection of member bank deposits and reserves in coming weeks and months will be influenced greatly by Treasury financing operations, the continuing shift to accelerated tax payment schedules and the banking system's experience in handling CD maturities at increasingly unfavorable differentials in rates. The latter is perhaps the pivotal factor that makes projections more than usually uncertain. Large CD run-offs, on the one hand, would tend to hold down the rate of bank credit expansion. But to the extent that CD funds may be diverted to demand deposit balances rather than to market instruments, the reduction in bank credit expansion would be less and there would be some offset to the decline in required reserves. The ways in which banks obtain needed reserves could produce divergent movements also in nonborrowed and total reserves over the coming month. For example, if banks come to the discount window for temporary accommodation, and if any easing in money market conditions is countered by open market operations, net borrowed reserves will increase and growth in nonborrowed reserves would be slower than growth in required and total reserves. On the other hand, if bank and investor adjustments in September bring such adverse money market reactions as to require System injection of nonborrowed reserves, it is conceivable that borrowings might not increase very much. Open market injections of reserves would tend to create excesses, which then could be tapped in the Federal funds market by banks experiencing CD run-offs. CONFIDENTIAL (FR) - 9 - August 19, 1966 August projections indicate a relatively small monthly average increase in the credit proxy -- about 2 to 3 per cent. Time deposit expansion is expected to slow, but for the month on average there should still be substantial growth -- around 13 per cent. A large reduction in U.S. Government demand deposits is projected, despite the $3.0 billion financing to be credited to tax and loan accounts on August 26. Loan repayments and credit rationing are expected to hold private demand deposit expansion down on average to about a 3 per cent annual rate. Consequently, required reserves may decline about 2 per cent. Assuming no appreciable further change in money market conditions, and also assuming no significant run-off in CD's, a sizable increase in bank credit and deposits would be expected in September. Both the credit proxy and required reserves would be expected to increase about 8 per cent. Private demand deposits would be expected to increase 14 per cent, reflecting large temporary shifts from Government deposits in the second half of August and in September. Time deposits would be expected to expand more slowly, at about an 8 per cent annual rate compared to 13 per cent in August, reflecting the passing of the interest-crediting period and the assumed leveling off in the volume of outstanding CD's. Even under present money market rate relationships, however, a more likely assumption is that there will be a CD run-off in September. If money market conditions continue to tighten, it would not be unreasonable to anticipate a large run-off, perhaps as much as 10 per cent or $1.8 billion over the course of the month, although any CONFIDENTIAL (FR) - 10 - August 19, 1966 quantification is necessarily sheer conjecture at this time. If the funds flowed largely to market securities, and the reserves released were absorbed by open market operations, a CD liquidation on this scale would reduce bank credit expansion for the month by about 5 percentage points (from 8 per cent to 3 per cent annual rate). Assuming some offsetting expansion in demand deposit growth, total required reserves would rise on the order of 7 per cent annual rate. Table A-1 MARGINAL RESERVE (Dollar amounts in millions, Excess reserves Period As MEASURES based on period averages of daily figures) Member banks I borrowinas to revised Free reserves I II I, date Monthly (reserves weeks ending in): As expected at conclusion of each week's open market opeations As first published each week 1965--June July August September October November December 358 349 387 413 358 341 430 534 527 549 552 490 418 452 -176 -178 -162 -139 -132 1966--January February March April May June July p Weekly 1966--April 6 13 20 27 380 357 335 361 315 370 374 431 474 545 638 653 722 739 - 51 333 360 373 380 623 603 685 642 -290 -243 -312 -262 -225 -286 -281 -280 -241 -282 -270 -316 May 4 11 18 25 286 340 319 314 617 780 663 653 -331 -340 -344 -339 -280 -324 -315 -351 -280 -310 -341 -370 June 1 8 15 22 29 436 207 465 282 459 812 547 788 691 771 -376 -340 -364 -375 -341 -417 -350 -342 -360 -336 -394 -368 6 13 20 27 350 724 171 250 827 818 6831 680 -459 -432 -456 -155 -479 -441 -473 -133 -528 -445 3 10 17 344 481 264 778 782 730 -434 -301 -466 -427 -383 -466 -427 -417 - 77 - 22 __ July Aug. p - p - Preliminary Preliminary -117 -210 -277 -339 -352 -365 -323 -409 -312 -477 - 94 -487 TABLE A-2 AGGREGATE RESERVES AND RELATED MEASURES Retrospective Changes, Seasonally Adjusted (In per cent, annual rates based on monthly averages of daily figures) Re s e r v e Annually: 1963 1964 1965 Monthly: 1965--January February March April May June July August September October November December r e a t e s Required reserves Total Nd Against Toa Nonborrowed Reserves Reserv Total Demand Reserves __________ _ Deposits (Series Revised) + 3.5 + 3.2 + 3.8 + 1.7 + 4.2 + 4.5 + 4.9 + 3.1 + 5.3 + 4.3 + 5.2 + 2.4 + 6.1 +10.5 + 6.4 + 9.2 - 0.8 + 9.5 + 4.8 - 0.8 - 1.4 + 9.9 + 0.2 +14.5 + 1.9 + 7.7 + 2.1 + 7.6 + 2.1 + 4.8 + 4.1 + 1.5 - 4.0 + 7.3 + 4.6 +10.5 Ag + 1.8 + 8.1 + 8.4 + 6.4 + 6.7 + 7.2 + 4.8 - 1.8 - 2.4 + 9.7 - 2.4 +14.3 + 0.2 + 3.0 + 9.0 +14.8 - 1.3 + 7.8 + 0.7 - 7.1 -11.1 + 8.1 - 6.9 +11.2 Mo n e t ar y Var iab 1 es l M Time Money Supply al MeeDeposits Private Bank Deposits D Deposits (comm. Total Demand (credit) 1/ banks) Deposits + 7.5 + 7.6 + 9.1 +14.7 +12.8 +16.1 + 3.8 + 4.3 + 4.8 + 3.2 + 4.0 + 4.6 +10.5 +11.1 + 9.7 +14.1 + 4.1 + 9.6 + 7.5 + 8.4 + 1.3 +13.5 + 3.9 +11.0 +20.9 +20.5 +10.1 +12.7 + 9.9 +11.6 +15.0 +21.8 +12.8 +16.9 +15.9 +12.4 + 2.3 - 2.3 + 4.5 + 6.0 - 8.2 +13.5 + 5.2 + 1.5 +11.8 + 9.5 + 0.7 +12.3 + 1.0 - 3.8 + 4.8 + 7.6 -12.3 +16.3 + 4.7 -+13.2 + 9.3 - 0.9 +14.8 1966--January + 6.1 + 9.0 + 6.4 +12.0 + 9.1 + 8.2 + 7.2 + 5.5 February + 4.3 + 3.1 + 3.1 + 2.9 + 4.1 + 6.5 - 2.9 - 5.5 March + 2.4 - 5.2 + 2.3 + 1.5 + 4.0 + 6.5 + 8.6 +10.1 April +13.5 +11.1 +12.2 +17.7 +17.9 +16.0 +13.5 415.4 May + 0.1 - 0.3 + 1.9 - 6.0 + 2.3 +10.3 -11.2 -16.1 +14.5 +11.3 +10.2 + 4.8 + 2.1 - 0.6 - 1.8 - 0.7 June 2/ July 2/ p + 8.9 + 4.4 + 5.8 + 5.1 +10.2 +14.0 -10.5 -16.1 1/ Includes all deposits subject to reserve requirements. Movements in this aggregate correspond closely with movements in total member bank credit. 2/ Changes in reserves, total deposits, and time deposits have been adjusted for redefinition of time deposits effective June 9. Changes in reserves have been adjusted for increases in reserve requirements in July. p - Preliminary. Chart la MEMBER BANK RESERVES SEASONALLY ADJUSTED MONTHLY AVERAGES OF DAILY FIGURES BILLIONS OF DOLLARS 23.5 TOTAL RESERVES 23.0 r- -, 22.5 22.0 -S 21.5 21.0 - TOTAL REQUIRED REQUIRED AGAINST TOTAL PRIVATE DEPOSITS -- ' ~^"' '" RESERVES 00 U" 20.5 20.0 17.0 16.5 ------ ^) -REQUIRED AGAINST PRIVATE DEMAND DEPOSITS 16.0 15.5 I I I I I I J 1965 1966 I I Chart lb MEMBER BANK RESERVES MONTHLY AVERAGES OF DAILY FIGURES I BILLIONS OF DOLLARS, SEASONALLY ADJUSTED 23.5 i 23.0 REQUIRED RESERVES 22.5 NET BORROWED RESERVES NONBORROWED 22.0 RESERVES - 21.5 21.0 20.5 I BILLIONS OF DOLLARS 1.0 BANK BORROWINGS MEMBER .5 EXCESS RESERVES 0 _I I II I 1965 I il Iii 1966 I Chart 2 MONEY SUPPLY AND BANK DEPOSITS SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES BILLIONS OF DOLLARS BILLIONS OF DOLLARS TOTAL MEMBER BANK (Credit Proxy) DEPOSITS 245 -240 235 230 MONEY SUPPLY 225 170 165 220 4 WEEK MOVING AVERAGE 160 - 155 TIME (All DEPOSITS ADJUSTED Commercial Banks) 150 145 140 135 NEGOTIABLE 130 CD'S 20 -(Unadjusted) 15 I I I M I I J 1965 S I I D I I M I I J 10 I S D 1966 *CHANGE IN SERIES Chart 3 DEMAND DEPOSITS AND CURRENCY SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES BILLIONS OF DOLLARS 45 MONEY SUPPLY COMPONENTS: 40 CURRENCY OUTSIDE BANKS 35 30 140 135 DEMAND DEPOSITS 130 125 - * 4 WEEK MOVING AVERAGE 120 15 U.S. GOVT. DEMAND DEPOSITS Banks) (Member 10 O 1I I M 1 I _I , 1 1 J 1965 S D 1I I I M ______J__III J 1966 S D Table B-1 MAJOR SOURCES AND USES OF RESERVES Period Retrospective and Prospective (Dollar amounts in millions, based on weekly averages of daily figures) Factors affecting supply of reserves Change Bank use of reserves Excess Required in Gold Currency Technical Federal Reserve credit (excl. outside factors total reserves float) I/ stock net 2/ banks 3/ reserves reserves ACTUAL Year: 1964 (12/25/63 - 12/23/64) +3,219 - 165 -1,847 -365 +840 + 1965 (12/23/64 - 12/22/65) +3,926 -1,578 -2,228 +845 +966 +1,136 -170 +2,167 +1,444 -1,530 - 454 - 454 755 -661 -511 -477 -469 - 244 272 -233 -197 22 29 + 224 393 - 28 73 + + 60 217 +578 -320 +389 +217 + + 572 40 -183 +177 July 6 13 20 27 p + 851 + 5 -1,264 + 228 + + - 2 I 1 28 + + 748 134 212 212 +135 +205 +736 -408 +237 + 79 -317 + 3 + + - 346 295 226 77 -159 +374 -533 + 79 Aug. 3 p 10 p 17 p + + - 655 141 634 + - 174 1 1 + 73 405 106 -460 +173 +242 + 50 - 90 -287 - 43 227 70 + 94 +137 -217 Aug. 24 31 70 +1,180 - 20 55 + + 65 20 - 30 -745 - 55 +400 + 55 400 -- Sept. 7 14 21 28 + + 515 130 520 240 - 10 10 10 10 + + + 600 280 210 45 + 80 +310 +765 -400 - 15 +450 +445 -125 + + - 15 450 445 125 -- Oct. 5 + 685 - 10 - 265 -300 +110 + 110 910 - 70 Year-to-date: (12/30/74 - 8/18/65) (12/29/65 - 8/17/66) Weekly: 1966--June PROJECTED 4/ For retrospective details, see Table B-4. For factors included, see Table B-3. For required reserves by type of deposits, see Table B-2. See reverse side for explanation of projections. p - Preliminary. Table B-2 CHANGES IN REQUIRED RESERVE COMPONENTS Retrospective and Prospective Seasonal and Nonseasonal Changes (Dollar amounts in millions, based on weekly averages of daily figures) Period Total T .U. required reserves reservests Supporting S. Gov't. demand demand private deposits _Supporting Total Total Demand Demand deposits ACTUAL Year: 1964 (12/25/63 - 12/23/64) 1965 (12/23/64 - 12/22/65) Seasonal changes + 910 +1,136 -115 -170 +1,025 +1,306 + 16 - 241 272 +136 -139 - 377 133 -943 -930 1522 29 65 132 572 40 -200 -353 +283 +630 265 221 289 590 +120 +263 6 132/ 20-' 27 p 2/ 346 295 236 77 +121 -244 -191 + 39 43 227 70 -155 + 1 -135 Time Time Other than seasonal changes seasonal Demand Demand changes Time Time +542 +529 +467 +664 + 70 + 63 + 77 - 25 +419 +759 - 9 +141 - 11 + 13 - 40 - 16 + 9 - 18 -298 + 18 +315 -315 + + 225 51 527 116 + 86 + 10 - 19 +115 -236 + 14 + 37 + + 37 +368 -146 + 99 112 228 65 + 82 + 44 -147 + +113 Year-to-date: (12/30/64 - 8/18/65) (12/29/65 - 8/17/66) Weekly: 1966--June July Aug. 8 1/ 3 p 10 p 17 p +167 +113 9 - 69 - 18 - 95 8 5 4 -135 - 10 +180 + 14 + 29 PROJECTED Aug. Sept. Oct. 1/ 2/ 24 - 55 -100 + 45 -165 - 10 +210 + 10 31 + 400 +265 + 135 + 45 - 10 + 90 + 10 -- + 10 7 - 15 - 85 + 70 + 50 + 10 14- + 450 -185 + 635 +350 -- 2128 + - 445 130 + 20 +405 + - 425 535 +215 -500 - 35 + 20 +165 - 60 + 80 + 5 5 + 105 - 40 + 145 +115 + 10 + 15 + - 75 +360 5 Redefinition of time deposits subject to reserve requirements released $34 million of reserve effective June 9. Increase in percentage reserve requirements against time deposits absorb an estimated $360 million of reserves at city banks effective July 14 and again September 8 and $80 million at country banks effective July 21 and again September 15. p - Preliminary. Table B-3 TECHNICAL FACTORS AFFECTING RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) Technical factors (net) Period Foreign deposits Float Treasury and gold operations Sloans (Sign indicates effect on reserves) ACTUAL Year: 1964 (12/25/63 - 1/23/64 1965 (12/23/64 - 1/22/65) -365 +845 -470 +232 Year-to-date: (12/30/64 - 8/18/65) (12/29/65 - 8/17/66) -661 -511 - 21 -201 Weekly: 1966--June 22 29 +578 -320 - 84 - 13 Other nonmember deposits and F. R. accounts + 11 - 7 +178 +651 -1,114 -189 + 43 - 17 +517 -104 + 96 - 78 +445 -275 - 25 + 2 + 62 + 31 + + + July 6 13 20 27 +135 +205 +736 -408 +184 -302 -136 - 71 + 27 +424 +795 -450 + + Aug. 3 10 17 -460 +173 +242 - 29 +203 + 29 -336 -115 +200 -177 +184 + 5 + 82 - 99 + 8 - 30 + 15 + 80 -- -125 -745 +155 -900 56 56 13 18 20 27 90 95 PROJECTED Aug. 24 31 Sept. 7 14 21 28 + 80 +310 +765 -400 ----- Oct. -300 - 5 + 80 +250 +700 -490 -300 ----- + 60 + 65 -- Table B-4 SOURCES OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) Period Total Federal Reserve credit (excl. float) I Total holdings U. S. Government securities Outright Repurchase agreements Other Bills Bankers' ans tanes Member bank brr n borrowings Year: 1964 (12/25/63 - 12/23/64) 1965 (12/23/64 - 12/22/65) +3,219 +3,926 +3,340 +3,898 +2,086 +3,226 +2,167 +1,250 +2,200 +1,151 +1,808 + 739 369 422 309 99 391 402 292 68 292 185 128 203 627 6 185 224 393 442 225 23 131 267 411 166 73 72 173 851 5 -l ,264 + 228 790 71 972 189 655 141 634 572 138 580 +1,022 + 916 +232 -244 - 61 + 67 - 60 - 39 -267 - 27 - 20 - 52 - 13 +184 + 82 + +217 -164 -135 - 43 + - Year-to-date: (12/30/64 - 8/18/65) (12/29/65 - 8/17/66) Weekly: 1966--May June July Aug. 4 11 + + 18 25 + 1 8 15 22 29 + 6 13 20 27 + + 3 10 17 + + + + 1 + 17 3 + 41 + 26 + 21 + 37 - 58 + 34 706 61 966 186 + - + 414 56 422 +158 +194 -158 I 4 1 3 - 33 + 4 + 46 5 25 63 17 10 +159 -265 +241 - 97 + 80 - 10 + 56 - 9 -187 + 49 -15 - 1 - 2 + 98 + 4 - 52 - 57 -105 Chart Reference Table C-1 TOTAL, NONBORROWED AND REQUIRED RESERVES Seasonally Adjusted (Dollar amounts in millions, based on monthly averages of daily figures) (Revised series) 2/ Total Period reserves Required reserves Nonborrowed reserves Total Aainst private deposits .o Demand 1964--January February March April May June July August September October November December 20,561 20,588 20,665 20,794 20,689 20,966 21,017 21,127 21,349 21,319 21,442 21,416 20,271 20,302 20,463 20,517 20,495 20,716 20,731 20,832 20,996 20,983 21,055 21,158 20,139 20,192 20,343 20,370 20,350 20,554 20,596 20,748 20,907 20,919 21,068 21,097 19,385 19,448 19,498 19,570 19,550 19,655 19,792 19,915 20,055 20,187 20,218 20,316 15,296 15,319 15,346 15,381 15,325 15,392 15,497 15,557 15,656 15,736 15,713 15,762 1965--January February March April May June July August September October November December 21,525 21,714 21,830 21,997 21,982 22,156 22,245 22,231 22,205 22,273 22,276 22,546 21,192 21,238 21,366 21,501 21,539 21,626 21,699 21,726 21,653 21,785 21,869 22,060 21,129 21,271 21,420 21,535 21,656 21,786 21,873 21,840 21,797 21,974 21,930 22,192 20,364 20,415 20,546 20,665 20,518 20,768 20,846 20,940 21,183 21,375 21,413 21,618 15,727 15,702 15,792 15,858 15,672 15,876 15,895 15,889 16,074 16,187 16,162 16,321 1966--January February March April May June 1/ July p 1/ 22,661 22,742 22,787 23,043 23,044 23,006 23,182 22,225 22,383 22,186 22,391 22,386 22,329 22,393 22,311 22,368 22,411 22,638 22,673 22,660 22,757 21,702 21,693 21,885 22,145 21,938 22,165 22,067 16,377 16,344 16,508 16,687 16,434 16,626 16,460 p - Preliminary. Reserves have been adjusted for redefinition of time deposits effective June 9. 1/ 2/ Revised to reflect current levels of reserve requirements and changes in seasonal factors. Table C-2 DEPOSITS SUPPORTED BY REQUIRED RESERVES AT ALL MEMBER BANKS Seasonally adjusted (Dollar amounts in millions, based on monthly averages of daily figres) Monthly Total member bank deposits (credit) Time deposits Private demand deposits 2/ / U. S. Gov't. demand deposits 1964--January February March April May June July August September October November December 202,981 203,759 205,068 206,176 206,613 208,669 209,312 211,506 212,906 214,109 215,849 216,738 93,563 94,495 95,011 95,852 96,677 97,542 98,273 99,725 100,670 101,850 103,090 104,215 104,407 104,569 104,749 104,987 104,609 105,066 105,783 106,189 106,868 107,410 107,259 107,591 5,011 4,695 5,308 5,337 5,327 6,061 5,256 5,592 5,368 4,849 5,500 4,932 1965--January February March April May June July August September October November December 218,640 220,663 222,445 225,068 225,840 227,642 229,056 230,664 230,913 233,505 234,264 236,411 106,107 107,843 108,778 109,996 110,898 111,955 113,306 115,594 116,900 118,718 120,152 121,220 107,353 107,178 107,795 108,243 106,975 108,372 108,497 108,456 109,717 110,489 110,327 111,409 5,180 5,642 5,872 6,829 7,967 7,315 7,253 6,614 4,296 4,298 3,785 3,782 1966--January February March April May June 3/ July p 3/ 238,204 239,024 239,811 243,398 243,863 244,833 246,943 121,861 122,401 123,038 124,898 125,953 126,750 128,329 111,787 111,562 112,684 113,905 112,170 113,488 112,389 4,556 5,061 4,089 4,595 5,740 4,595 6,225 1/ 2/ 3/ Includes all deposits subject to reserve requirements--i.e., the total of time, private demand, and U.S. Government demand deposits. Movements in this aggregate correspond closely with movements in total member bank credit. Private demand deposits include demand deposits of individuals, partnerships and corporations and net interbank balances. Deposits have been adjusted for redefinition of time deposits effective 9, Preliminary. p -- June TABLE C-2a DEPOSITS SUPPORTED BY REQUIRED RESERVES AT ALL MEMBER BANKS Seasonally adjusted (Dollar amounts in millions, based on weekly averages of daily figu res) Week ending: 1966--Feb. Mar. 2 Total member bank deposits S(credit1/ I 239.899 238,866 238,966 238,542 Time deposits __ 122,193 122,026 122,562 122,490 Private demand deposits 2/ 112,050 112,003 111,715 110,694 U. S. Gov't. demand deposits 5,656 4,837 4,689 5,358 16 23 30 238,958 239,366 239,559 239,710 240,437 122,284 122,288 122,757 123,335 123,770 111,691 111,957 112,560 113,155 113,017 4,983 5,121 4,242 3,220 3,650 Apr. 6 13 20 27 242,648 243,216 243,286 243,882 124,508 124,684 125,042 125,311 113,306 113,764 114,482 113,810 4,834 4,768 3,762 4,761 May 4 11 18 25 244,178 244,465 244,091 243,395 125,369 125,455 125,815 126,330 113,407 112,952 112,372 111,954 5,402 6,058 5,904 5,111 1 243,664 244,274 242,644 243,999 245,028 126,433 126,778 125,749 125,966 126,079 112,115 113,137 113,152 115,035 112,924 5,116 4,359 3,743 2,998 6,025 246,689 246,299 245,994 246,178 126,456 127,377 127,528 127,747 113,587 112,265 112,480 111,543 6,646 6,657 5,986 6,888 245,814 245,561 245,690 128,208 128,391 129,020 111,792 110,915 112,161 5,814 6,255 4,509 June 9 8 15* 22* 29* July 6* 13* 20* 27p* Aug. 3 p* 10 p* 17 p* p - Preliminary. 1/ Includes all deposits subject to reserve requirements--i.e., the total of time, private demand, and U.S. Government demand deposits. Movements in this aggregate correspond closely with movements in total member bank credit. 2/ Private demand deposits include demand deposits on individuals, partnerships and corporations and net interbank balances. * - Deposits have been adjusted for redefinition of time deposits effective June 9. TABLE C-3 MONEY SUPPLY AND TIME DEPOSITS AT ALL COMMERCIAL BANKS Seasonally Adjusted (Dollar amounts in billions, based on monthly averages of daily figures) Private Monthly Money Supply Currency 1/ __ _Deposits2/ 1964--January February March April May June July August September October November December 153.6 1965--January February March April May June July August September October November December 1966--January February March April May June 3/ July p 3/ 1/ 2/ 3/ Demand Deposits 2/ Time Deposits D s Adjusted 32.6 32.8 32.9 33.0 33.3 33.4 33.6 33.8 33.9 34.0 34.2 34.2 121.0 121.1 121.2 121.4 121.2 122.1 123.0 123.3 124.3 124.8 124.8 125.4 113.5 114.6 115.3 116.2 117.3 118.5 119.4 121.0 122.1 123.5 125.1 126.6 160.0 159.7 160.3 161.1 160.0 161.8 162.5 162.7 164.3 165.6 165.7 167.4 34.5 34.7 34.7 34.7 34.9 35.0 35.2 35.4 35.6 125.5 125.1 125.6 126.4 125.1 126.8 127.3 127.3 128.7 129.7 129.6 131.2 128.8 131.0 132.1 133.5 134.6 135.9 137.6 140.1 141.6 143.6 145.5 147.0 168.4 168.0 169.2 171.1 36.7 36.8 36.9 37.1 37.3 131.8 131.2 132.3 134.0 132.2 133.8 132.0 148.0 148.8 149.6 151.6 152.9 154.2 156.0 153.8 154.1 154.5 154.5 155.5 156.6 157.1 158.2 158.8 159.1 159.7 169.5 171.1 169.6 35.9 36.1 36.3 37.3 37.6 Includes currency outside the Treasury, the Federal Reserve, and the vaults of all commercial banks. Includes (1) demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. Government, less cash items in process of collection and Federal Reserve float; and (2) foreign demand balances at Federal Reserve Banks. Deposits have been adjusted for redefinition of time deposits effective June 9. p - Preliminary. TABLE C-3a MONEY SUPPLY AND TIME DEPOSITS AT ALL COMMERCIAL BANKS Seasonally Adjusted (Dollar amounts in billions, based on monthly averages of daily figures) Week Ending Money Supply Currency I/ Private Demandadjusted Deposits 167.9 168.1 168.3 167.5 36.7 36.9 36.8 36.9 131.2 131.3 131.5 130.6 148.4 148.4 148.8 149.0 Mar. 2 9 16 23 30 168.5 168.7 169.2 169.8 169.1 36.9 36.9 36.9 36.9 36.9 131.6 131.8 132.3 132.9 132.2 149.2 149.2 149.5 149.8 150.2 Apr. 6 13 20 27 160.1 171.2 171.3 170.8 36.9 37.2 37.0 37.1 133.2 134.0 134.3 133.7 150.7 151.2 151.7 152.1 May 4 11 18 25 170.4 170.0 169.7 169.0 37.2 37.2 37.3 37.3 133.2 132.8 132.3 131.7 152.3 152.5 152.9 153.4 June 1 8 168.9 170.5 170.6 172.8 160.6 37.3 37.3 37.4 37.4 37.4 131.6 133.2 133.2 135.4 133.5 153.6 153.8 153.9 154.0 154.5 July *6 *13 *20 *27 p 171.2 169.6 169.7 168.7 37.4 37.6 37.7 37.7 133.8 131.0 155.0 155.8 156.2 156.6 Aug. *3 *10 *17 169.2 168.1 169.3 37.7 37.6 37.7 131.5 130.5 131.6 156.9 157.3 157.9 *15 *22 *29 2/ adjusted 2 9 16 23 1966--Feb. 1/ 2/ Time Deposits 132.1 132.1 Includes currency outside the Treasury, the ederal Reserve, and the vaults of all commercial banks. Includes (1) demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. Government, less cash items in process of collection and Federal Reserve float; and (2) foreign demand balances of Federal Reserve Banks. * - Deposits have been adjusted for redefinition of time deposits effective June 9. p - Preliminary. FINANCIAL MARKET RELATIONSHIPS IN PERSPECTIVE /Mrn a -h 1 , av - 5 Period d/ n er , e aviale . I = arv kT y .age W o d f il .ay i UUes; amuts 4.01 4.07 4.11 3.80 3.83 3.84 4.21 4.21 4.25 4.58 4.61 4.63 3.15 3.16 3.16 + 87 + 73 + 27 Sept. -139 552 3.95 3.92 4.30 4.67 3.25 Oct. Nov. Dec. -132 - 77 - 22 490 418 452 4.05 4.09 4.28 4.02 4.08 4.37 4.32 4.40 4.50 4.69 4.72 4.85 3.jl 3.34 3.39 - 51 -117 -210 -277 -339 -352 -365 431 474 545 638 653 722 739 4.32. 4.58 4.64 4.64 4.83 5.13 5.18 4.58 4.65 4.58 4.61 4.63 4.50 4.78 4.52 4.71 4.72 4.65 4.69 4.73 4.84 4.81 4.96 5.09 5.03 5.16 5.35 5.48 3.39 3.48 3.55 3.46 3.53 3.60 3.77 July Aug. l ons M o o arsz (New Series) 534 527 549 1966--Jan. Feb. Mar. Apr. May June July p il 1 Flow of Reserves. Bank Credit and Money NonTotal Bank Money Time borrowed Rereserves serves Supply Deposits -176 -178 -162 1965--June July Aug. +174 + 89 - 14 +1,802 +1,414 +1,608 +1,800 + 700 + 200 +1,300 +1,700 +2,500 - 73 - 26 + 249 +1,600 +1,500 +132 + 84 +191 + 68 + 3 +270 +2,592 + 759 +2,147 +1,300 + 100 +1,700 +2,000 +1,900 +1,500 +165 + 58 - 97 +205 - 5 - 33* + 82* +115 + 81 + 45 +256 + 1 - 14* +194* +1,793 + 820 + 787 +3,587 + 465 + 970* +2,110* +1,000 - 400 +1,200 +1,900 -1,600 +1,600 - 500 +1,000 + 800 + 800 +2,000 +1,300 +1,200* +1,600* 6 -477 827 5.25 4.64 4.82 -- 3.77 +1,661 + 600 + 500 13 20 - 94 -460 818 631 5.38 4.48 4.75 4.91 4.84 4.86 5.49 -- 3.77 3.77 - 390 305 -1,600 + 100 + + 700 500 27 p -429 680 5.45 4.78 4.83 5.47 3.78 + 184 -1,000 + 400 3 p -434 778 5.58 4.77 4.86 5.56 3.79 - 364 + 500 + 300 10 p -301 782 5.70 4.82 4.86 -- 3.87 - 253 -1,100 + 400 17 p -466 730 5.15 5.00 4.90 295 467 3.47 4.05 3.53 3.95 4.19 4.27 464 644 731 4.43 4.72 5.31 4.55 4.61 4.69 4.55 4.61 4.81 5.01 5.17 5.50 3.46 3.50 3.74 597 4.78 4.61 4.68 5.17 3.55 107 Year 1964 - 90 1965 Recent variations in growth -111 Dec. 1-Mar. 16 -299 Mar. 16-June 1 -368 June 1-Aug. 17 Dec. s Money Market Indicators I Bond Yields Federal 3-montl Corporate Municipal New U. S. Funds Treaseere Rate ury Gov't. Issues (Aaa) Bill 20 yr.) (Aaa) 1-Aug. 17 -243 4.75 Averages 4.44 4.58 + 600 +1,200 + 129 Annual rates of increase 2/ +12.8 +4.2 +-7.6 + 4.3 +16.1 + 5.3 + 9.1 + 4.8 3.94 3.09 3.16 +4.5 + 4.3 .. . . . . + 5.8 + 8.1 +10.0 + 7.3 - 0.8 + 1.1 + 7.3 +13.0 +13.2 + 7.5 + 3.0 +10.7 , Time deposits adjusted at all commercial banksS. Base is average for month preceding specified period or in the case of weekly pe riods, the first week shown. * Changes have been adjusted for redefinition of time deposits effective June 9. p-Preliminary. August 19, 1966. 

Federal Reserve (1966, August 22). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19660823

@misc{wtfs_bluebook_19660823,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1966},
  month = {Aug},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19660823},
  note = {Retrieved via When the Fed Speaks corpus}
}