Bluebook

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Content last modified 6/05/2009. (CONFIDENTIAL FR) October 13, 1972 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM October 13, 1972 CONFIDENTIAL (FR) MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) The narrowly-defined money supply grew at a 6 per cent annual rate in September, little more than in August and well below the 11 per cent annual rate projected in the Blue Book at the time of the last Committee meeting. It turned out that half of the $2 billion bulge in M 1 that developed over the two statement weeks ending September 6--which included the long Labor Day weekend--was immediately reversed, and the level of M 1 remained reduced throughout the month. Because of the marked shortfall in M 1 , growth of M 2 in September was also below expectations, although less so than M 1 due to a slightly stronger than anticipated growth in time deposits. (2) For much of the inter-meeting period RPD growth also appeared to be running below the 9-1/2 to 13-1/2 per cent September-October target range. Most recently, however, unexpectedly large excess reserves have raised the indicated RPD growth rate for the two months to 10-1/2 per cent (with about two percentage points representing larger excess reserves than assumed at the time of the Committee meeting). (3) In view of the Committee's desire to attain a lower rate of growth in M1 and other aggregates than had been projected, and with credit market conditions calming, the Federal funds rate was allowed to edge up a little over the inter-meeting period. On a weekly average basis, the range -2of movement was from 4.93 per cent in the week of the last meeting to a high of 5.15 per cent. This latter rate was on the high side of the Desk's aim, and in the most recent statement week the funds rate averaged 5.09 per cent. (4) Most other short-term interest rates have also risen somewhat since the last meeting of the Committee. The 3-month bill rate has been most recently quoted at 4.85 per cent, up about 20 basis points since the last meeting. The prevailing bank prime rate moved up to 5-3/4 per cent, and two banks with a floating prime rate went to 5-7/8 per cent today. Most long-term rates, on the other hand, have shown little change since the last Committee meeting, except that municipal bond yields have declined fairly substantially. Stability in bond markets in part reflected recent rumors of an imminent peace settlement in Vietnam and possibly also hopes for favorable Congressional action on an expenditure ceiling. In these circumstances, the Treasury elected to meet its October cash needs by auctioning a $2 billion two-year note. The average rate in the auction was 5.86 per cent, but following allotment the price of the issue dropped by about the estimated value of the tax and loan account credit and the market yield rose to 5.95 per cent. (5) The table on the following page shows seasonally adjusted annual rates of change in monetary aggregates over recent periods. Most Recent two Calendar Years Dec '71 over Dec '69 Past Year Sept '72 over Sept '71 Past 6 Months Sept '72 over Mar. '72 Past 3 Months Sept '72 over June '72 Past Month Sept '72 over Aug. '72 Total Reserves 6.9 7.4 8.3 3.6 - 0.9 Nonborrowed Reserves 9.0 7.3 5.4 - 2.0 - 7.9 Reserves available to support private nonbank deposits 8.3 8.4 8.6 10.0 13.5 M 1 (currenty plus demand deposits) 1/ 6.0 6.2 7.0 8.6 6.0 M2 (M plus time deposits at commercial banks other than large CD's) 13.0 10.1 9.0 9.3 8.4 M3 (M2 plus deposits at thrift institutions) 11.0 12.4 11.3 1.5 10.1 9.3 11.2 11.1 10.8 10.5 Loans and investments of commercial banks 2/ 10.2 13.1 11.7 13.6 11.9 22.4 8.7 6.9 3.2 0.3 1.6- Concepts of Money Bank Credit Total member bank deposits (Bank credit proxy adj.) Short-term market paper (Actual $ change in billions) Large CD's Nonbank commercial paper 1/ 2/ 3/ - 0.5- / - 2.3-2 1.0 - 1.5-' Other than interbank and U.S. Government. Based on month-end figures. Includes loans sold to affiliates and branches. Changes are for specified periods but ending August 1972, the latest month for which data are available. NOTE: All items are based on averages of daily figures, except for data on total loans and investment of commercial banks, commercial paper, and thrift institutions--which are either end-of-month or last Wednesday of month figures. -4Prospective developments (6) The approach taken in this blue book differs in some respects from previous practice--the principal difference being to puc more stress on targets and less on projections. The table on the following page shows possible longer-run targets for key monetary aggregates which the Committee may wish to consider in setting its financial objectives. The longer-run relationships among monetary aggregates and interest rates are discussed in paragraphs (7) to (9). Suggested shorter-run operating targets that are thought to be generally consistent with the longer-run objectives are presented in paragraphs (10) to (14). (7) The longer-run targets under alternative A are indexed by an M1 annual growth rate of 7 per cent in each of the fourth and first quarters. We would expect that there may be only a modest further rise in short-term interest rates in the fourth quarter under this alternative. In the first quarter, with the rate of increase in nominal GNP projected to continue strong and with large contra-seasonal Treasury cash borrowing anticipated, short-term rates seem likely to rise more rapidly. The timing of interest rate movements cannot, of course, be predicted with any certainty. It is always possible, for example, that sizable foreign central bank transactions may affect the bill market. Also, interest rates could rise substantially late this year as the market anticipated heavy Treasury first quarter credit demands. On balance, one might anticipate a 3-month Treasury bill rate rising to a 5-1/2--5-3/4 per cent area by the end of the first quarter. (8) Under alternatives B and C (indexed by 6 per cent and 5 per cent annual rates of growth in M1, respectively) the staff would expect upward -5Alternative Longer-Run Targets for Key Monetary Aggregates M2 1972 1973 Alt. A Alt. B Alt. Sept. 241.7 241.7 Dec. 246.0 March 250.3 C Alt. A Alt. 241.7 501.8 245.3 244.7 249.0 247.8 Adjusted Credit Proxy I Alt. C Alt. A Alt. B Alt. C. 501.8 501.8 392.7 392.7 392.7 512.4 511.0 519.9 401.9 400.8 399.9 521.7 519.4 516.4 407.7 406.1 404.2 Rates B of Growth 1972 4th Q. 7.0 6.0 5.0 8.5 7.5 6.5 9.5 8.5 7.5 1973 1st Q. 7.0 6.0 5.0 7.5 6.5 5.0 6. b 5.5 4.5 Total Reserves 1972 1973 RPD -- I I I III Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Sept. 33,357 33,357 33,357 30,900 30,900 30,900 Dec. 34,553 34,430 34,315 31,634 31,513 31,401 Jan. 34,694 34,469 34,228 32,154 31,931 31,692 9.5 8.0 6.5 6.5 5.5 3.5 Rates of Growth 1972 4th Q. 14.5 13.0 1973 1st Q. 1.5 0.5 11.5 - 1.0 -6pressure on short-term interest rates to emerge sooner and to carry rates to higher levels than under alternative A. It is likely that Treasury bill rates by some time in early 1973 would move above ceiling rates on consumer-type time deposits (for which the highest rate is 5-3/4 per cent on 2-year and over maturities), thus raising the odds on a substantial slowing in time deposit inflows to banks by late in the first quarter. As a result, M2 growth, particularly under alternative C, is targeted to slow more than M1 growth. Net inflows to nonbank savings institutions, whose ceiling rates on time certificates are 1/4 percentage point higher than banks, would also come under pressure, though not importantly perhaps until the second quarter. (9) In long-term markets, credit demand pressures from private sectors are expected to remain moderate into the winter. However, given its large cash needs, the Treasury seems likely to tap all possible sources, including the bond market, to satisfy its financing requirements. In general, though, long-term markets are most vulnerable to upward rate pressures from the supply of funds side. The institutional supply of funds would likely be constrained under alternative C, and to a smaller degree under B. And as interest rates began to rise, there might be some temporary investor withdrawal from long-term commitments of funds. (10) Suggested short-run operating targets for the two month October-November period are shown below for the various alternatives described above: Alt. A 8--12 Nonborrowed RPD Alt. C Alt. B 5-1/2--9-1/2 3-1/2--7-1/2 6--10 RPD 8-1/2--12-1/2 7-1/2--11-1/2 M1 6-1/2--7-1/2 5-1/2--6-1/2 4-1/2--5-1/2 7--8 6-1/2--7-1/2 4-3/4--6 5--6-1/2 400--700 450--800 8--9 M2 Federal funds rate 4-1/2--5-1/2 350--600 Borrowings (11) The suggested operating targets indicate ranges for the two month October-November period for the average growth rates of reserves, for average growth rates for money supply as variously measured, and for money market conditions as represented by the Federal funds rate. The mid- points of the RPD ranges are thought to be consistent with the mid-points of M1 and M2 growth rates for each of the alternatives. All of the Federal funds rate ranges encompass current money market conditions, with the range being wide enough to make it reasonably probable that aggregate objectives under the various alternatives would be attained. Under alternative A, the Federal funds rate range centers on recently prevailing conditions, and the staff would expect that realization of the targeted growth rates in the aggregates would produce little movement in the average funds rate. Under alternative B, the funds rate range is skewed above prevailing rate levels, indicating our expectations that restraining monetary growth to the rates targeted would induce a rise in the funds rate. range is skewed even more in an upward direction. Under alternative C, the -8(12) While the Committee could direct the Account Manager to utilize the operating targets shown above in any one of several ways, it may wish to consider the following approach which is similar to the procedure followed by the Committee in recent meetings. Under the proposed approach if RPD appears to be moving toward the high end of the indicated range, for example, the Desk would become somewhat more grudging in supplying nonborrowed reserves and still more grudging if RPD seemed to be exceeding the range--but not to the extent of forcing the funds rate above whatever upper limit the Committee might specify. But in judging whether to take reserve action that tightens (or eases) the money market, the Desk would be guided also by developments in the monetary aggregates. For instance, if the monetary aggregates appear to be remaining within the Committee's targeted range, the Manager would not have to take any reserve action that tightens or eases the money market, even though RPD is running high or low in its range. (Under such circumstances, it would be presumed that unanticipated changes in the multiplier relationship between reserves and monetary aggregates had occurred.) If, on the other hand, monetary aggregates should move outside the Committee's targeted range, the Desk would modify reserve-supplying operations in the appropriate direction, subject to the federal funds rate constraint. The funds rate ranges shown in paragraph (10)can, of course, be modified by the Committee on policy grounds, depending upon how much emphasis it wants to place on limiting possible variations in interest rates, the degree to which it wishes to stress growth rates for the aggregates, and the extent to which it wants to take account of special circumstances of the moment such as "even keel". -9(13) In the interval between now and the next meeting, the 3-month Treasury bill rate may drift up, assuming a Federal funds rate around prevailing levels. The Treasury may again add about $200 million per week to its weekly bill auctions beginning in November. In addition, it appears now that the Treasury, because of a tight cash position, will have to lower its cash balance at the Fed in the first half of November, forcing the System to undertake offsetting operations. Given the improved technical position of the market, however, we would not expect sizable upward rate pressures in the near-term--for example, the 3-month bill rate is not likely to move much above 5 per cent--unless the funds rate were to move up appreciably. Similarly, near-term pressures in long-term markets would likely be quite modest, given the moderation of private credit demands, if prevailing money market conditions are maintained. (14) The recent Treasury cash offering and the forthcoming financing to be announced on October 25 would, however, augment the sensitivity of long- and short-term credit markets to a persistent firming of money market conditions. In addition to refinancing a small amount of securities maturing in mid-November, the forthcoming Treasury operation may also raise new cash, perhaps about $2 billion. -10Proposed directives (15) Presented below are three alternative formulations for the operational paragraph of the directive, which might be taken to correspond to the similarly lettered policy alternatives discussed in the preceding section: Alternative A special] account of "To implement this policy, while taking [DEL: the effects of possible bank regulatory changes, TREASURY FINANCING international and OPERATIONS, AND developments in credit markets, [DEL: developments,] the Committee seeks to achieve bank reserve and money market conditions that will support SOMEWHAT more moderate growth in monetary aggregates over the months ahead THAN RECORDED IN THE THIRD QUARTER." Alternative B special] account of "To implement this policy, while taking [DEL: the effects of possible bank regulatory changes, TREASURY FINANCING international and OPERATIONS, AND developments in credit markets, [DEL: developments,] the Committee seeks to achieve bank reserve and money market conditions that will support more moderate growth in monetary aggregates over the months ahead THAN RECORDED IN THE THIRD QUARTER." -11Alternative C [DEL: account of "To implement this policy, while taking special] the effects of possible bank regulatory changes, TREASURY FINANCING international and OPERATIONS, AND developments in credit markets, [DEL: developments,] the Committee seeks to achieve bank reserve and money more]moderate growth in monetary market conditions that will support [DEL: aggregates over the months ahead." (16) In all three alternatives, it is proposed to retain the references to possible bank regulatory changes and credit market developments; to add a reference to Treasury financing, particularly because of the November refinancing to be announced in late October; and to delete the reference to international developments, in view of the recent strength of the dollar. Also, it is proposed to delete the word "special" in the phrase "while taking special account. . . ." because of the recently improved technical condition of credit markets. (17) In alternatives A and B, which call, respectively, for "somewhat more" and "more" moderate growth in monetary aggregates over the months ahead, it quarter." is proposed to add the phrase "than recorded in the third This addition is proposed in the interest of clarity, since the long-run monetary growth rates specified under these alternatives, while below the third-quarter rates, are equal to or above those recorded in August and September. STRICTLY CONFIDENTIAL FR) CHART 1 10/13/72 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS -33 13 5% for Sept Oct 9 5% growth I J J S 1971 D M J 1972 S D J A S 1972 I I 0 N CHART 2 STRICTLY CONfIDENTIALFR) 10/13/72 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS -240 -220 A I I I I I BROADER MONEY SUPPLY M2 1971 1972 J J S A 1972 O N CHART 3 STRICTLY CONFIDENTIAL(FR) 10/13/72 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 4M0 -400 400 380 S390 -360 - 380 S340 SIIIIII I i IIII1 I 1 1 1 -? TOTAL RESERVES - 36 36 34 34 33 S32 32 1971 1972 J J A S 1972 O N CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS PER CENT FWF KLY AVFRACGF INTEREST RATES Short-term INTEREST RATES Long-term WEFKLY AVERAGES I PER CENT WEEKLY 1 -7 FHA MORTGAGES FNMA MONDAY AUCTION -5 \ \a_ FEDERAL FUNDS RATE -3 MUNICIPAL Aaa WEDNESDAY RESERVES GOVERNMENT BONDS BILLIONS OF DOLLARS - BORROWED 20 YEAR AVERAGES -f) vv vvle V v 1 NET BORROWED l l I 9 1971 IIIIII 1 I I l 1 1. 2I I 1972 1971 1972 1.I, II 1.1 1971 II I 1.I l. i l 1972 l.111 STRICTLY CONFIDENTIAL(FR) Table 1 October 13, Bank Reserves Reserves R Vn... Seasonally Adjusted Target and Actual Associated and Period 4- 1972--May June July Aug. Sept. Oct. Patterns r u 30,568 30,963 31,052-31,2551/ Annual Rates of Change 1971--3rd Qtr. 4th Qtr. 1972--tst Qtr. 2nd Qtr. 3rd Qtr. :::i:i:::::::::::::: : : :: :::::: :::::: :: : i....i.i.i ii .: .. i: i;i:f:i ;:;i!i :::::i!i i 1972--May June July Aug. Sept. Oct. Sept.-Oct. 15.5 7.5 9.5-13.51/ for rrojecen u~,.,a~ 29,951 30,148 30,365 30,555 30,900 (31,099) pri e! No an b t Aergt Reere AXeeate Reserves --.- Not Seasonally Adjusted Target and Actual Associated and Paterns (M) Preteced (4) Total 4i 30,267 30,674 30,185-30,3881 29,775 29,788 30,166 30,253 30,612 (30,967) 4 .3 4.8 10.8 7 .1 ......... :......: : ::::::::: 10.0 Private uemao (7) ) Time and (5) 15) Reserves (6) 32,830 33,059 33,138 33,382 33,357 (33,933) 32,728 32,967 32,924 33,016 32,799 (33,402) 20,874 20,874 21,052 21,131 21,306 (21,326) 7.2 2.2 6.0 6.8 3.3 0.5 8.8 16.4 10.1 12.8 3.6 11.0 13.0 -2.0 6.8 4.0 8.3 18.0 14.2 15.4 0.9 7.5 8.8 -1.6 3.4 -7.9 (22.0) (7.0) 10.2 4.5 9.9 (1.0) (5.5) U.S. ~ ~ d Nou 2981s (8) to Reserves 5OOOO~ 6.9 8.4 2.9 8.8 -0.9 (20.5) (10.0) 6.2 7.9 8.6 7.5 13.5 (7.5) (10.5) Nonborrowed 1972 gsurs assrv Kequir ed RKeerB es Seasonallv Adtusted 8,934 9,059 9,136 9,249 9,408 (9,502) Cov't. and ... -. er ta (9) n0 2,879 2,911 2,774 2,826 2,457 (2,834) 23.6 16.8 10.2 14.8 20.6 (12.0) (16.5) Weekly: 28 30,187 30,054 30,322 29,943 5 12 19 26 30,449 30,055 30,357 30,475 2 9 16 23 30 30,570 30,434 30,563 30,278 30,822 Sept. 6 13 20 27 31,397 30,457 31,025 30,766 1972--June July Aug. Oct. 7 14 21 30,962 31,176 4 11 29,589 29, 606 29,947 29,906 33,217 32,953 33,213 32,761 33,163 32,864 33,158 32,649 20,766 20,912 20,975 20,803 9,024 9,052 9,058 9,092 3,030 2,899 2,890 2,818 30,155 29,883 30,239 30,238 33,383 32,671 33,301 33,124 33,119 32,462 33,143 32,968 21,020 20,854 20,983 21,273 9,092 9,119 9,156 9,137 2,934 2,616 2,944 2,649 30,373 33,340 33,368 33,481 33,090 33,544 33,014 33,124 33,125 32,750 33,043 21,149 21,118 21,066 21,048 21,264 9,176 9,217 9,244 9,253 9,293 2,770 2,934 2,917 2,812 2,722 30, 869 ::::::: ........... 30,104 :: ;:::::::::^:::::::::: ................ ::::: 30,763 30,616 33,775 32,765 33,370 33,370 32,938 32,617 32,586 32,785 21,285 21,277 21,414 21,249 9,331 9,412 9,417 9,445 2,378 2,308 2,345 2,604 30, 927 30,737 33,842 33,861 33,413 33,309 21,293 21,268 9,442 9,485 2,881 2,685 :: ::::::::: :::::::::::; ::::::::::::::::::::::::: l::::::::::::;^::::: ::::::::::::::;:::::;: 30,075 ::::::::::::::::::::::::: 30,421 ::::::::::::::::::::::::: ::: .......... ::::: 30,027 ....:::.......... ::: 30,368 ......................... :::::::::::::;?::;;:: ::::::::::::::::::::::::: ............... ::::: :::::::::::::::::::::::: :::::::::::::::::::::::::::::: .......... ... -. :: 9 :I_ NWTE: 1/ Data shown in parentheses are current - . _ _ projections. At the FOMCmeeting September 19, 1972 the Committee agreed on an RPD range of 11.5 to 15.5 per cent, assuming that Regulations D and J went into effect. The range shown here is consistent with that adopted by the Committee but removes the effect of changes in Regulations D and J. the principle change is to lower the average level of excess reserves. -. -I Growth Rates consistent with alternative C 1/ Annual Sept. 11.0 11.0 M. M Credit Proxy 99.0 (Adj.) Oct. QIII 7.5 8.0 10.5 10.0 16.0 10.5 Narrow Money Supply (M,) Period Table 2 236.6 239.4 240.5 241.7 (243.0) 1971--4th Qtr. 1972--1st 2nd 3rd 4th Qtr. Qtr. Qtr. Qtr. 1972--June July Aug. Sept. Oct. 13, October Broad Money Supply (M2 ) U.S. Govt. Deposits Adjusted Credit Proxy (2) (3) Billions of Dollars 490.4 495.0 498.3 501.8 (505.4) (4) 382.4 386.3 389.3 392.7 (396.0) 5.3 5.3 4.6 5.3 (6.2) Annual Percentage Rates of Change--Quarter 1.1 8.0 9.7 Total Time and Savings ' k ) 290.9 293.7 297.1 300.5 (303.1) Time deposits other than CD's ( ) 253.8 255.6 257.7 260.2 (262.4) Negotiable CD's Nondeposit Sources of Funds 1/) 37.1 38.1 39.3 40.3 (40.7) 3.8 3.9 4.2 4.1 (4.0) and Month 15.9 14.7 9.3 5.3 8.6 (7. 0) 13.3 8.6 9.3 (8.5) 11.3 11.1 10.8 (9.5) 14.8 15.7 13.2 (11.5) 17.1 11.8 10.1 (9.5) 5.6 14.2 5.5 6.0 (6.5) 10.6 11.3 8.0 8.4 ( 8.5) 4.7 12.2 9.3 10.5 (10.0) 16.3 11.6 13.9 13.7 (10.5) 14.8 8.5 9.9 11.6 (10.0) Weekly Pattern in Billions of Dollars 1972--June 7 14 21 28 236.6 236.6 237.3 236.1 489.3 490.0 491.5 490.7 383.2 381.6 383.7 381.3 289.5 290.7 291.2 291.9 252.7 253.4 254.2 254.6 36.8 37.3 37.0 37.3 3.7 3.5 3.8 4.0 July 5 12 19 26 238.0 240.9 239.7 239.5 493.7 495.8 495.0 495.4 384.4 384.4 386.6 388.2 293.1 292.8 293.5 294.4 255.7 255.0 255.3 255.9 37.4 37.9 38.2 38.5 3.8 3.5 4.1 4.0 2 16 9 16 23 30 239.7 240.1 240.9 240.5 241.2 496.2 497.1 498.6 498.3 499.8 387.5 388.2 389.8 388.7 390.1 295.1 295.6 296.5 297.6 298.9 256.5 257.0 257.7 257.8 258.5 38.6 38.6 38.8 39.7 40.4 4.1 4.1 4.1 4.4 4.1 Sept. 6 13 20 27 p 242.6 241.5 241.6 241.2 502.2 501.2 501.6 501.5 390.9 391.9 393.2 392.4 299.4 300.1 300.3 301.1 259.6 259.7 259.9 260.3 39.7 40.4 40.3 40.8 4.0 4.1 4.1 4.2 Oct. & p 11 pe 241.7 242.7 503.8 504.4 395.0 394.1 302.5 302.0 262.2 261.7 40.4 40.4 4.2 4.0 Aug. "' pe - Partially estimated. Data shown in parentheses are current projections. Annual retes of change other than those for the pa st are rounded to nearest half per cent. As shown in the September 15, 1972 Bluebook. NOTES: 1/ 1972 11.0 (1) ' Monthly Pattern in 1972--June July Aug. Sept. Oct. STRICTLY CONFIDENTIAL (FR) Monetary Aggregates (Actual and current projections, seasonally adjusted) STRICTLY CONFIDENTIAL (FR) OCTOBER 13, 1972 Table 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) BTils & Accept. (1) Monthly 1972 - Apr. May June July Aug. Sept. Oct. Nov. Weekly Aug. Sept. Oct. 1/ 2/ 3/ 4/ 5/ Open Market Operations 1/ Coupon Agency RP's Net/ Issues Issues (4) (2) (3) 644 180 748 -543 -906 -158 410 110 -116 -- 169 -127 - 26 - 3 - 35 2 9 16 23 30 - 59 - 37 82 -351 -316 --116 -- - 38 127 --- 93 Total (5) Daily Average Reserve Effect 2/ Open Market A Member Other 4/ Factors Bank Borrowing Operations (8) (7) (6) 750 1,205 -1,205 -816 -816 472 1,386 221 - 570 22 -1,009 1,687 469 201 463 238 -1,617 10 10 -25 108 237 76 -1,053 232 - 449 89 135 1,370 158 378 -315 145 -60 -403 486 -131 42 337 735 26 46 -1,589 1,536 638 65 128 -1,824 1,127 191 -76 95 -34 129 - - 88 123 57 329 276 180 53 155 141 303 - 36 292 - 98 -165 -185 135 -298 291 -339 -2,731 - 7 360 31 -117 -688 1,894 - - - 6 -409 - -- -2,322 13 -331 -- - 34 - 278 - 642 20 27 -228 400 -- - 1 -- - 1,898 755 - 1,669 375 345 635 570 68 -1 p - 4 11 18 25 221 444 116 2,155 -1,380 - 2,357 819 993 337 -113p 97p - - 20 -- A in reserve categories req. res. against available res. (6)+(7+(8)-(9 U.S.G. and interb. (10) (9) -2,048 - 2 501 77 -765 418 463p -162 155p 659 -1519 131p 460p 431p 6 1 6p 318p -192p Represents change in the System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill auctions. Represents change in daily average level from preceding period. Includes matched sale-purchase transactions as well as RP's. Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, and other FR accounts. Target change for September and October reflects the mid-point of the target range adopted at the Reserves to support private nonbank deposits. Target change for previous months reflects the bluebook patterns that are consistent with the mid-points of target September 19, 1972 FOMC meeting. ranges that were adopted during the month. / ATarget available/ reserves (11) 650 -90 15 360 100 405 -385 STRICTLY CONFIDENTIAL (FR) OCTOBER 13, 1972 Table 4 SECURITY DEALER POSITIONS AND BANK RESERVES Millions of Dollars U.S. Govt. Security Dealer Positions Bills Coupon Issues Period (1) Other Security Dealer Positions Member Bank Reserve Positions Corporate Municipal -anda Rnna (3) (4) (5) (2) Excess Borrowings -Rerve9 at -4,833 -1,910 206 501 -295 -3,355 -4,159 207 263 165 360 407 107 -153 -144 50 -2,436 -3,056 -2,791 -4,258 -4,063 -4,375 173 124 249 20 33 99 153 91 150 -2,667 -3,203 -3,208 -4,192 -3,072 -3,522 99 134 260 136 104 204 109 119 94 27 - 15 110 -3,026 -2,625 -2,828 -3,299 -2,652 -2,864 142 114 53 166 176 174 147 255 146p 202 438 515p - 55 -183 -369p -2,997 -3,817 -3,835 -2,745 -2,904 -4,024 686 927 886 551 347 93 129 114 118 118 98 140 167 237 240 242 130 254 40 227 363 287 382 348 477 -121 -157 -128 -308 -250 -2,736 -4,353 -4,375 -3,859 -3,321 -2,654 -2,674 -2,607 -3,280 -2,550 * * 314 239 123 64 103 58 35 15 204 202 163 73 796 -115 281 7p 837 149 717 551p - 41 -264 -436 44 -5 p -3,403 -4,499 -4,350 -3,180 -3,591 -4,719 -4,425 -3,717 * * 170 60 51 80 51 110 2 68 p 3 -170p -162p -3,260p -4,305p -3,416p 4 6 2 - ,5 p 1,180 84 1972 -- High Low 4,291 1,916 1,585 -93 247 10 316 40 796 -133 1971 -- Sept. 2,481 1,087 118 168 Oct. Nov. Dec. 2,263 2,417 2,544 1,521 2,462 1,761 173 201 170 246 328 251 Jan. Feb. Mar. 3,004 2,408 3,489 1,416 1,176 604 135 149 101 206 136 185 Apr. May June 2,612 2,792 2,694 274 675 205 46 123 87 2,262 2,643 *4,099 97 692 *170 2 9 16 23 30 2,315 1,958 7,195 2,346 3,891 Sept. 6 13 20 27 4,223 4,291 *4,262 *3,831 Oct. *3,507 *2,909 --- Securicy dealer (9) -4,499 -1,638 590 - 61 Government Other (I -380 -544p 556 30 Notes: Vnrk (8) 837 12 337 0 4 11 18 25 Nr -5,499 -2,569 2,834 343 Aug. (7) -4,714 -1,545 4,733 1,350 1972 -- 1 202 -988 High Low July Aug. Sept. Basis Reserve Dficit RP*PT (6) 1971 -- 1972 -- Net Free PR trading positiuns are on a - i--..4 UcomlimtlLIClIeli b Ualaj. 438 p 535p 37 p ,...flJ--l. di iau Lnl it pOuoii-ola, WILlncW!L l --- LUUI a ItUUC il1 uy UllJ.J fi- jIII. IIe d b y .pULL.Iaoc agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security dealer positions The basis reserve deficit is excess reserves less borrowing at Federal Reserve in syndicate, excluding trading positions. are debt issues still Weekly data are daily averages for statement weeks, except for corporate and municipal issues In syndicate which less net Federal funds purchases. are Friday figures. * STRICTLY CONFIDENTIAL CONFIDENTIAL (FR) OCTOBER 13, 1972 Table 5 SELECTED INTEREST RATES Per Cent Long-term Short-term Federal Perod () unds Treasury Bills 90-day 1-year (2) 90-19 day Commercial Paper New Issue Aaa Utility, (3) (4) (5) Municipal Bond Buyer (1 . Go stant Maturity) FNMA Auction Yields (6) (7) (8) 1971 -- High Low 5 73 3.29 5 47 3.32 5.94 3.53 5.88 4.00 8.26 7.02 6.23 4.97 6.89 5.42 8.07 7.32 1972 -- High Low 5.15 3.18 4.74 3 03 5.52 3.60 5.25 3.75 7.60 7.08 5.54 4.99 6.58 5.87 7.69 7.54 1971 -- Sept 5.55 4 69 5.19 5,69 7.68 5.37 6.14 7.87 Oct. Nov. Dec. 5.20 4.91 4.14 4.46 4.22 4 01 4.75 4.49 4.40 5 42 4.85 4,66 7.50 7.38 7.28 5,06 5.20 5.21 5.93 5.81 5.93 7.84 7.71 7.62 Jan. Feb. Mar. 3.50 3.29 3.83 3.38 3.20 3.73 3.82 4.06 4.43 4.03 3.81 4.10 7.21 7 34 7.24 5.12 5.29 5.31 5.95 6.08 6.07 7.61 7.61 7.55 Apr May June 4.17 4.27 4.46 3.71 3.69 3.91 4.65 4.46 4.71 4.55 4.45 4.60 7.45 7.38 7.32 5.43 5.31 5.34 6.19 6.13 6.11 7.58 7.63 7.62 July Aug. Sept. 4.55 4.80 4.87 3.98 4.02 4.66 4.90 4.90 5.44 4.83 4.75 5.07 7.38 7.37 7.40 5,41 5.30 5.36 6.11 6.21 6.55 7.62 7.63 7.64 Aug. 2 9 16 23 30 4.56 4.69 4.87 4.75 4.90 3.82 3.84 3.88 4.01 4.33 4.79 4.77 4.73 4.89 5.21 4.73 4.63 4.70 4.80 4.85 7.40 7.37 7.32 -7.41 5.32 5.24 5.22 5.32 5.38 6.14 6.15 6.18 6.22 6.38 Sept.6 13 20 27 4 89 4.69 4,93 4 99 4.62 4.72 4,66 4.65 5.32 5.39 5 45 5.52 5.00 5.00 5.08 5.13 7.38 7.34 7,44 7.42 5.39 5.38 5.37 5.30 6.51 6.55 6.57 6.58 7.63 Oct. 4 11 18 25 5.15 5.09 4.60 4.74 5 48 5.41 5.13 5.25 7.44 7.48 5.22 5.16 6.53 6.48p 7.69 1972 -- 1972 -- otes: 7.63 7.62 7.65 For coLumnas anra / the weeKLy date is the mid-point or ror columns L tO ' are scatement week averages or oaiy oata. the calendar week over which data are averaged. Column 6 is a one-day quote for the Thursday following the end of the statement week. Column 8 gives FNMA auction data for the Monday preceding the end of the statement week. The FNMA auction yield is the implicit yield in weekly or bi-weekly auction for short-term forward commitments for Government underwriteen mortgages. weeKLy data *New Series--Corporate New Issue Aaa Series discontinued CONFIDENTIAL (FR) Appendix Table I RESERVES AND MONETARY VARIABLES --Total Period iirrei Nonborrowed Money Stock Measures Available to Support Pvt. Deposits 1 (3) Annually: 3 2 (4) Bank Credit Measures Adjusted Total Credit Loans and Proxy Investments October 13, Time Other than ICD's Total Time (6) (5) Other Thrift lInstitution Deposits (9) (10) + + + 8.6 2.7 8.1 7.8 CD's Nondeposit Funds (11) (12) (Dollar Change in (Per Cent Annual Rates of Growth) 1968 1969 1970 1971 1972 + 4 + + 7.8 3.2 5.4 6.2 + 9.3 + 2.3 + 8.1 + 11.1 + 8.3 + 2.8 + 7.8 + 13.3 + + + + 9.7 0.6 8.3 9.5 + 11.0 + 3.9 + 8.1 + 11.3 + 11.3 4.9 + 17.9 + 17.9 + 11.1 + 1.4 + 11.0 + 16.2 S2.8 12.6 -14.5 - 7.9 U.S. Govt. Demand (13) Billions) + 2.6 + 13.0 8.4 7.6 + + - - 4.6 2.6 0.4 + + - 0.1 0.3 1.1 0.3 Seml-Annuallv" 1st Half 1970 2nd Half 1970 + 0.4 11.6 1st Half 1971 2nd Half 1971 + + 9.6 4.7 1st Half 1972 + 3.0 + 15.2 + 5.2 +10.6 + + 5.6 5.2 + 5.8 + 10.1 + 5.0 + 10.3 + 4.8 + 11.4 + 5.2 + 10.8 + 8.4 + 26.3 + 6.0 + 15.6 + 4.7 + 10.6 + + +10.9 + 4.6 + 10.0 + 2.4 + 15.5 + 6.3 + 17.0 + 8.8 + + 9.7 8.8 + 11.5 + 10.6 + 22.3 + 12.2 + 21.2 + 10.1 + 20.1 + 13.5 9.3 6.5 + 11.6 + 12.1 + 9.0 + 7.4 + 11.1 + 13. 4 + 11.3 + 12.8 + 15.6 + 14.7 + 17.9 + 8.9 + 10.0 + 7.2 + 2.2 + 10.1 + 12.8 + 3.6 + 9.5 + 9.0 + 6.0 4- 6.8 + 11.0 + 13.0 - 2.0 +10.8 +10.6 + 4.3 + 4.8 +10.8 + 7.1 +10.0 + 9.1 4- 10.6 + 3.7 + 1.1 + 9.3 + 5.3 + 8.6 + 18.1 + 12.4 + 4.4 + 8.0 + 13.3 + 8.6 + 9.3 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + Jan. Feb. Mar. + 10.6 + 8.6 + 7.3 + 8.1 + 11.7 + 8.4 + 8.2 + 9.0 +14.9 + 2.8 + 13.4 + 11.0 + 14.1 + 20.7 4 18.7 + 15.7 + 20.9 + 19.3 + 10.2 + 11.9 + 10.3 + 12.8 + 14.6 + 9.1 Apr. May June + 8.5 + 13.4 + 7.9 + 16.9 + 9.9 +11.6 + 8.7 +11.3 4 8.2 + 14.1 + 9.1 + 12.1 + 13.9 + 10.7 + 15.5 + 15.2 + 12.0 + + + 8.5 8.8 7.7 July Aug. Sept. + 4.4 + 4.1 + 12.9 7.6 + 2.8 + 22.9 + 6.8 + 6.9 -0.8 + 10.1 + 3.2 2.1 + + + 4 10.5 6.6 6.2 Oct. Nov. Dec. 7.4 + 3.4 + 10.7 2.8 + 2.0 + 21.4 + 3.6 + 5.9 + 4.8 + 0.5 + 2.6 + 7.1 + 6.5 + 10.2 Jan. Feb. + 20.2 5.9 4 15.8 + 22.9 + 6.9 + 8.4 + 2.9 + 8,8 0.9 + + + + + + + + + Quarterly: let 2nd 3rd 4th let 2nd 3rd 1971: 1972: Qtr. Qtr. Qtr. Qtr. Qtr Qtr. Qtr. 1971 1971 1971 1971 1972 1972 1972 Mar Apr. May June July Aug. Seat. n , NOTE: , + + + + + + - 23.1 3.6 13.3 72.2 7.5 8.8 1.6 3.4 7.9 . + 9.2 + 7.4 + 15.6 + 7.0 + 6.2 +7.9 + 8.6 + 7.5 +13.5 + 3.2 + 12.6 + 11.9 + 7.7 + 2.6 + 5.6 + 14.2 + 5.5 + 6.0 +6 7.5 2.9 2.9 13.4 14.3 11.6 7.2 7.7 10.6 11.3 8.0 8 4 - 0.3 + 14.5 +14.9 + 0.3 + 28.8 + 29.7 + 26.0 + 26.0 + 28.3 + 26.5 + 23.9 + 18.5 + 22.1 - 1.5 1.6 1.6 - 0.7 0.9 0.8 + 7.4 + 9.7 + 13.6 + 13.2 + 15.5 + 14.8 + 16.0 + 13.6 + 11.8 + 22.5 + 12.9 + 15.8 + 1.9 1.0 0.4 + - 1.6 0.2 1.0 + 10.7 + 4.1 + 7.9 + 6.2 + 11.9 + 10.9 + 9.4 + 4.2 + 10.7 + + + 4.8 3.2 7.9 + 16.7 + 10.3 + 13.8 + 0.2 0.4 0.1 + + + 0.8 0.6 0.9 + 9.1 + 8.7 + 11.0 + 4.8 + 11.2 + 13.1 + 11.9 + 6.2 + 14.9 + 17.1 + 9.1 + 20.8 + 13.7 + 13.0 + 17.0 + 13.0 + 11.4 + 13.7 + + - 0.8 0.5 1.3 + + 1.9 0.7 0.8 + + + + + + + + + + + + + + + + + + + + + + + + + + + + 20.0 + 16.2 + 78 + 12.4 + + + + + + + + + + 23.9 + 17.6 + 19.0 + 15.8 + 10.6 + 16. + 18.3 + 12.4 S11 £ + - 0.1 0.3 0.1 0.2 + _0.1 2.6 + 2.4 + 1.3 + 0.2 + 0.1 + + 15.4 16.7 13 8 10,9 9.7 11.5 13.5 10.7 10.1 10.9 8.4 7.6 9.7 11.3 11.1 10.8 9.9 5.9 17.7 13.5 14.7 4.7 12.2 9.3 10.5 - Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, beginning October 1, 1970. p - Preliminary -- , 12.3 10.3 9.7 11.1 15.7 9.5 13.6 14.2 12.4 19.9 5.4 20.0 2.3 10.2 18.3 11.9 + + + + + 28.8 14.7 8.2 15.9 14.8 15.7 13.2 17.8 16.3 11.6 13.9 13.7 I , 24.4 15.4 10.8 7.8 12.6 14.8 8.5 9.9 11.6 21.9 17.3 13.7 12.8 20.5 2.4 0.3 2.3 0.4 - 0.1 0.8 27.5 14.0 5.3 14.7 17.1 11.8 10.1 18.9 14.4 7.8 9.6 15.5 10.8 11.5 and requirements on bank-related comaercial paper are included + Ar 0.3 2.1 -0.7 A- Appendix Table II RESERVES AND MONETARY VARIABLES (Seasonally adjusted, Billions of dollars) CONFIDENTIAL (FR) October 13, 1972 Reserves Period Total (1) Nonborrowed (2) Available to Support Pvt. Deposits Total (3) (4) Money Stock Measures Bank Credit Measures M1 Adjusted Credit Proxy M2 M3 Pvt. Dep. (5) (6) (7) Other Total Loans and Investments Total Time (8) (9) (10) Time other than CD's Thrift Institution Deposits (11) (12) CD's (13) NonDeposit Funds U.S. Gov't Demand (14) (15) Annually: Dec. Dec. Dec. 1968 1969 1970 27.249 27.977 29.132 26.471 26.829 28.764 24.963 25.245 26.747 197.4 203.7 214.8 154.0 157.7 165.8 378.0 368.8 418.2 572.6 588.3 634.0 304.6 303.4 330.6 390.6 406.0 438.9 204.2 194.1 228.9 180.6 183.2 203.4 194.6 201.5 215.8 23.6 11.0 25.5 7.0 20.0 11.6 5.1 5.3 6.4 1971--Jan. Feb. Mar. 29.390 29.600 29.779 28.958 29.240 29.445 26.930 27.132 27.470 215.3 217.7 219.7 166.0 168.0 169.7 423.1 430.4 437.1 642.2 653.4 663.9 333.4 336.7 339.6 443.6 449.0 452.4 234.4 240.2 245.4 207.8 212.7 217.4 219.2 223.0 226.8 26.6 27.5 28.1 10.1 8.6 7.0 5.8 4.9 4.0 Apr. May June 29.991 30.327 30.527 29.859 30.106 30.106 27.735 27.935 28.199 221.2 223.8 225.5 170.7 173.0 174.5 441.5 446.6 450.6 672.5 681.0 687.8 342.0 344.5 346.7 455.2 458.9 464.1 248.1 251.3 254.4 220.3 222.8 225.0 231.0 234.4 237.2 27.8 28.5 29.4 5.1 4.1 4.5 5.6 5.4 4.3 July Aug. Sept. 30.639 30.743 31.073 29.915 29.985 30.556 28.358 28.521 28.503 227.4 228.0 227.6 175.8 176.3 175.5 453.4 454.5 455.6 693.8 697.6 701.2 349.8 351.0 353.3 466.5 471.1 475.4 256.4 257.3 259.6 225.9 226.5 228.0 240.4 243.1 245.6 30.4 30.8 31.6 4.3 3.9 4.1 5.1 5.7 6.6 Oct. Nov. Dec. 30.882 30.970 31.246 30.485 30.535 31.079 28.588 28.728 28.844 227.7 227.7 228.2 175.5 175.5 175.7 458.3 460.8 464.7 706.5 711.6 718.1 354.7 358.0 361.9 480.1 482.6 488.6 263.3 265.3 269.9 230.6 233.1 236.4 248.3 250.8 253.4 32.7 32.2 33.4 4.8 5.4 4.0 4.7 5.4 6.2 1972--Jan. Feb. Mar. 31.772 31.616 32.032 31.678 31.582 31.931 29.064 29.244 29.625 228.8 231.2 233.5 176.0 178.0 179.9 469.9 475.5 480.1 727.3 737.4 745.9 364.9 366.7 372.1 494.4 499.5 507.8 274.4 278.1 279.9 241.2 244.3 246.5 257.4 261.8 265.8 33.2 33.8 33.4 4.0 3.6 3.7 6.3 3.7 6.1 Apr. May June 32.643 32.830 33.059 32.525 32.728 32.967 29.798 29.951 30.148 235.0 235.5 236.6 180.9 181.1 181.9 483.0 486.1 490.4 752.7 758.8 766.1 376.3 380.9 382.4 510.1 518.6 519.8 282.8 287.0 290.9 248.1 250.7 253.8 269.7 272.6 275.7 34.7 36.3 37.1 3.5 3.7 3.8 7.4 7.4 5.3 July Aug. Sept. p 33.138 33.382 33.357 32.924 33.016 32.799 30.365 30.555 30.900 239.4 240.5 241.7 184.5 185.5 186.2 495.0 498.3 501.8 774.7 781.6 788.2 386.3 389.3 392.7 524.2 532.2 537.5 293.7 297.1 300.5 255.6 257.7 260.2 279.7 283.3 286.3 38.1 39.3 40.3 3.9 4.2 4.1 5.3 4.6 5.3 7 14 21 28 33.217 32.953 33.213 32.761 33.163 32.864 33.158 32.649 30.187 30.054 30.322 29.943 236.6 236.6 237.3 236.1 182.0 181.9 182.6 181.3 489.3 490.0 491.5 490.7 iiiii 289.5 290.7 291.2 291.9 252.7 253.4 254.2 254.6 36.8 37.3 37.0 37.3 3.7 3.5 3.8 4.0 6.9 5.1 5.6 3.3 5 12 19 33.383 32.671 33.301 33.119 32.462 33.143 30.449 30.055 30.357 238.0 240.9 239.7 183.2 186.0 184.7 493.7 495.8 495.0 : 255.7 255.0 255.3 i ii . 293.1 292.8 293.5 37.4 37.9 38.2 3.8 3.5 4.1 5.4 3.5 5.2 26 33.124 32.968 30.475 239.5 184.5 495.4 iiii 388.2 294.4 255.9 ii i 38.5 4.0 6.2 2 9 16 23 30 33.340 33.368 33.481 33.090 33.544 33.014 33.124 33.125 32.750 33.043 30.570 30.434 30.563 30.278 30.822 239.71 240. 1 240.9 240.5 241.2 184.8 185.0 185.9 185.3 186.1 496.2 497. 1 498.6 498.3 ... 499.8 :.. 387.5 388.2 389.8 388.7 390.1 i iiiiii iiiijii295.6 iiiiii iiii 295.1 iiii iiiii' 296.5 297.6 298.9 256.5 257.0 257.7 257.8 258.5 38.6 38.6 38.8 39.7 40.4 4.1 4.1 4.1 4.4 4.1 5.5 6.0 5.6 3.1 3.4 6 13 20 27 p 33.775 32.765 33.370 33.370 32.938 32.617 32.586 32.785 31.397 30.457 31.025 30.766 242.6 241.5 241.61 241.2 187.3 186.0 186.1 185.6 502.2 501.2 501.6 501.5 390.9 391.9 393.2 392.4 i 299.4 300.1 300.1 301.1 259.6 259.7 259.9 260.3 39.7 40.4 40.3 4.0 4.1 4.1 4.2 4.4 4.9 5.9 4.7 4 p 33.842 33.413 30.962 241.7 186.2 503.8 302.5 262.2 40.4 4.2 6.7 Monthly: Weekl y : 1972--June July Aug. Sept. Oct. NOTES: iiiiii i i ii 383.2 381.6 383.7 381.3 384.4 384.4 386.6 : iiii i i ii i 395.0 ii! iiiiiiii iiii i i i i 2.... 25.. 384.4 i i iiiiiiiiii iiii ii . . . . iiiiiiiii iiiiiiii iiii iiiilii i i ii i *::: i i iiiiiiii iiiii0.8 Reserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements on bank related commercial paper are included beginning member banks deposits subject to reserve requirements, bank-related commercial paper, and Euro-dollar October 1, 1970. Adjusted credit proxy includes mainly total Monthly data are daily averages except for nonbank commercial paper figures which Weekly data are daily averages for statement weeks. borrowings of U.S. banks. institution deposits. loans and investments and thrift are for last day of month. Weekly data are not available for M3, total p - Preliminary. 

Federal Reserve (1972, October 16). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19721017

@misc{wtfs_bluebook_19721017,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1972},
  month = {Oct},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19721017},
  note = {Retrieved via When the Fed Speaks corpus}
}