Bluebook

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Content last modified 6/05/2009. (CONFIDENTIAL FR) December 15, 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 CONFIDENTIAL (FR) December 15, 1972 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) The money supply aggregates now appear to be growing at annual rates about 1-1/2 and 1 percentage points in excess of the Committee's November-December ranges of tolerance, below. as shown in the table However, during most of the interval, growth rates appeared to be running at or only slightly above their acceptable ranges. During November, growth in M1 was at about a 6-1/2 per cent annual rate--nearly double the low October rate. While growth in M2 was at about the same rate as in October, it too was at a faster pace than desired. 1/ It is possible that the recent strength in the money supply partly reflects Growth in Money and Credit Aggregates and RPD During November-December Period (SAAR in Percentage Points) Ranges of Tolerance Current Estimates RPD 6-10 13 M1 4-7 8-1/2 M 5-8 9 MEMO: Federal funds 4.75--5.-50 5,29 Week ending December 13 1/ More detail on recent changes in the reserve and monetary aggregates is provided by Tables 1 and 2 attached at the end of the Blue Book and in Appendix 1. technical problems of measurement and seasonal adjustments flowing from the change in this Regulation J, although our adjustments made for the effects of change: appear to us to be reasonably accurate. The most likely explanation of the overshoot would seem to be that money growth is again beginning to respond in a more nearly usual relationship to the rapid rate of economic expansion. (2) Intermeeting estimates of the growth in RPD's during the November-December target period have been substantially above the Committee's 6-10 per cent range of tolerance, with the most recent estimate close to a 13 per cent annual rate. However, about 3 percentage points of this overshoot reflects an increase in the reserve multiplier, as deposit growth has been greater than anticipated at large banks subject to high marginal reserve requirements and less than anticipated at smaller banks (including our estimates for non-member banks). The recent regulatory changes have made the multiplier unusually difficult to predict. (3) As evidence developed that the monetary aggregates were tending to run near the top or above the Committee's ranges of tolerance, the Desk provided RPD's more reluctantly. borrowing rose substantially over the bidding for Federal funds intensified. As a result, member bank intermeeting period, From the 5 per cent level pre- vailing at the time of the last Committee meeting, funds rate rose in cent. and bank the average Federal successive statement weeks to 5.03, 5.17, and 5.29 per Most recently, funds have traded around 5-1/2 per cent, the upper limit of the Committee's range of tolerance. (4) The advance in the Federal funds rate was accompanied by rate increases ranging generally from 10 to 30 basis points in short-term markets and from 5 to 20 basis points in longer-term markets. The rate on the 3-month Treasury bill reached a high of around 5.10 per cent in the most recent auction held today--roughly 30 basis points above the level prevailing at the time of the last meeting. The Treasury has just announced the offering of a $2 billion, 2-year, 5-7/8 per cent note to be auctioned December 20 and paid for December 28. In addition, it reveal- ed plans to offer $500-$750 million of 20-30 year bonds in early January. (5) The table on the following page compares recent changes in the money and credit aggregates (at seasonally adjusted annual rates) with those for selected earlier periods. Most Recent two Calendar Years Dec. '71 over Dec. '69 Past Year Nov. '72 over Nov. '71 Total Reserves 6.9 10.1 7.8 8.8 11.5 Nonborrowed Reserves 9,0 9.6 4.5 5.4 9.3 Reserves available to support private nonbank deposits 8.3 9.1 9.2 10.1 13.7 M1 (currency plus demand deposits) 1/ 6.0 7.0 6.9 5.2 6.4 13.0 10.3 9.1 7.9 7.6 11.0 12.6 11.2 10.0 9.1 9.3 11.7 9.7 10.4 11.8 10.2 14.4 12.8 14.8 20.6 22.4 9.1 5.0 2.0 0.6 Past 6 Months Nov. '72 over May '72 Past 3 Months Nov. '72 over Aug. '72 Past Month Nov. '72 over Oct. '72 Concepts of Money M2 (M1 plus time deposits at commercial banks other than large CD's) M3 (M2 plus deposits at thrift institutions) Bank Credit Total member Lank deposits (bank credit proxy adj.) Loans and investments of commercial banks 2/ Short-term market paper (Actual $ change in billions) Large CD's Nonbank commercial paper 0.3 2.3 -0.1 0.8 -0.4 1/ Other than interbank and U. S. Government. 2/ Based on month-end figures. Includes loans sold to affiliates and branches. 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. Prospective developments (6) Three alternative sets of relationships among monetary aggregates and money market conditions (with figures for aggregates representing seasonally adjusted annual rates of growth) are shown in summary form below for FOMC consideration. More detailed monthly and quarterly figures are shown in the table on the following page. Alt. A Alt. B Alt. C Longer-run targets for aggregates(represented by average growth rates for first half of 1973) 1/ 7% 5-1/2 7-1/2 Credit Proxy 7 7-1/2 RPD 6-1/2 7 5 5 Associated range for December '72-January '73 Nonborrowed RPD 6-1/2--10-1/2 2-6 RPD 8-1/2--12-1/2 8-12 7-11 M1 7-1/2--10-1/2 7-10 6-9 M2 8-11 Federal funds rate 1/ 10-14 4-7/8--5-1/2 Rounded to nearest 1/2 per cent. 7-1/2--10-1/2 5-1/8--5-7/8 7-10 5-3/8--6-1/4 Alternative Longer-Run Targets for Key Monetary Aggregates M1 M2 Adjusted Credit Proxy Alt. A Alt. B Alt. C Alt. 245.6 512.5 512.5 512.4 247.1 246.8 516.2 515.9 250.3 250. 1 249.3 522.7 254.4 253.5 251.8 532.1 Alt. A Alt. 1972 Dec. 245.7 245.7 1973 Jan. 247.2 March June B Alt. C Alt. B Alt. 401.1 401.1 401.0 515.4 403.2 403.0 402.5 522.4 520.5 406.8 406.7 405. 1 530.8 526.5 415.4 414.7 411. 7 A C Quarters 1972 4th Q. 7.0 7.0 6.5 Rates of Growth 8.5 8.5 8.5 8.5 8.5 8.5 1973 1st Q. 2nd Q. 7.5 6.5 7.0 5.5 6.0 4.0 8.0 7.0 6.5 4.5 5.5 8.5 5.5 8.0 4.0 6.5 1972 Dec. 10.5 10.5 10.0 10.0 10.0 10.0 5.0 5.0 5.0 1973 Jan. 7.5 7.0 5.5 8.5 8.0 7.0 6.5 5.5 4.5 7.5 6.5 Months Total Reserves A RPD Alt. B Alt. C 31,240 28,790 28,785 28,782 31,151 31,133 33,049 31,089 30,986 31,797 29,037 29,370 29,884 29,008 29,328 29,799 29.947 29,182 29,547 13.0 -1.5 12.0 11.5 -3.5 13.0 -3.5 10.5 11.5 -6.0 9.5 8.0 7.0 12.0 10.5 9.5 7.5 6.5 12.0 9.5 9.5 5.5 5.0 11.5 7.0 Alt. A Alt. 1972 Dec. 31,248 31,243 1973 Jan. March June 31,181 31,176 32,150 Quarters 1972 4th Q. 1973 let Q. 2nd Q. Months: Dec. 1972 Jan. 1973 B Alt. C Alt. Rates of Growth 13.0 -1.0 12.5 12.0 -2.5 (7) The December-January ranges of tolerance for the aggregates range above the associated longer-run targets. Accordingly, the Committee may wish to specify that shortfalls of some dimension should not be taken as indicating a need to provide reserves more actively to ease money market conditions. The 2-month ranges are high mainly because of the substantial increase of the monetary aggregates that seems already in train for December; the January growth rates for M 1 are indicated to be closer to longer-run targets. Also, in both December and January the $5.4billion of revenue sharing payments may have a transitory effect in increasing growth in M 1 for any given level of interest rates. (8) The three alternatives shown for longer-run targets include annual rates of growth in M 1 for the first half of 1973 of 7, 6, and 5 per cent. This is the same range of targets as presented to the FOMC at its previous meeting. At that meeting, the Committee adopted a longer-run target path for the aggregates (for the fourth quarter of '72 and first quarter of '73 combined) as indexed by M 1 growth of 6 per cent. noted earlier, have indicated that M desires. Recent figures, as growth is strong relative to Committee We expect that growth in M 1 for the fourth quarter of 1972 will be about 7 per cent, give or take 1/2 of one percentage point. (9) None of the paths presented indicates a first quarter growth rate for M1 consistent with a 6 per cent average growth rate for the fourth and first quarters combined. To achieve that objective the required first quarter growth would have to be at around a 5 per cent annual rate. The staff believes that efforts to obtain such a growth rate would lead to a -8very sharp rise in the funds rate during the winter, followed by a drop in the funds rate during the spring unless the Committee were willing to tolerate considerably slower growth rates in the aggregates as the year progressed. (10) Of the alternatives presented, a 5 per cent M 1 target for the first alternative C--which encompasses half of 1973--does involve a slowing of M1 growth that eventually compensates for recent overshoots. factors affecting money demand, the slowing of M1 growth is most marked in the second quarter. Because of indicated to be In that period, money demand is expected to be moderated by disappearance of the transitory upward effect on M 1 of unusually large tax refunds in late winter and early spring. In addition, demand for money would be reduced,with a lag, by the substantial rise of interest rates indicated for that alternative. It is thought that attainment of the alternative C aggregate targets would be accompanied by a rise in the Federal funds rate to around 6 per cent over the next few weeks, with perhaps some modest further increase developing later in the winter. (11) the first Alternative B encompasses a 6 per cent M1 growth rate over half of 1973, while alternative A involves a 7 per cent rate. The 6 per cent target appears consistent with little further change in money market conditions, but the higher target would seem to involve some easing. In any event, money demand is likely to be weaker in the second quarter than the first, partly because of the effect of the tax refunds noted in the previous paragraph. In addition, under alternative B, Treasury bill and other short-term market rates are likely to rise a bit over the first quarter, even given prevailing money market conditions, demand later. and thereby work to retard money -9(12) Over the next few weeks, because the market has not yet adjusted to a 5-1/2 per cent Federal funds rate, persistence of the rate around that level could lead to a rise in the 3-month bill to around 5-1/4 per cent. However, bill purchases by the public in recent days, partly related to revenue sharing, have improved the technical position of the bill market and may moderate very near-term rate adjustments. A movement of the Federal funds rate above 5-1/2 per cent--as would be contemplated under alternative C and is possible under alternative B--would set off larger short-term market rate adjustments. become more pressing. Questions about the discount rate would And if the funds rate were to penetrate the 6 per cent level, the accompanying rise in short-term market rates could bring into question the substainability of ceiling rates on consumer-type time deposits as net inflows of such deposits decelerated markedly. (13) Long-term interest rates may show only little, if any, increase under alternative B in view of the moderate size of long-term credit demands. The more substantial rise in short rates anticipated under alternative C, however, probably would exert considerable pressure on longer-term markets. This would be expected on anticipatory grounds alone, but would be reinforced as unfavorable rate relationships put savings inflows to banks and other institutions increasingly under downward pressure. -10- Proposed directives (14) 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. In all three alternatives a reference to Treasury financing operations is proposed in light of the forthcoming auction of $2 billion in notes and the announced plans for a 20-30 year bond offering in early January. Deletion of the reference to bank regulatory changes is suggested on the grounds that banks have adjusted to the new regulations. For alternatives B and C, a reference to credit market developments is suggested should the Committee wish to take account of the possible reaction to a further rise in the funds rate while the market is still adjusting to the rise that has already occurred. Alternative A To implement this policy, while taking account of TREASURY FINANCING OPERATIONS the regulatory bank recent of effects [DEL: changes], the Committee seeks to achieve bank reserve and money market conditions that will support [DEL: moderate] more gates over the months ahead [DEL: quarter] third the in recorded than growth in monetary aggreAT ABOUT THE RATES THAT APPEAR INDICATED FOR THE SECOND HALF OF THIS YEAR. Alternative B To implement this policy, while taking account of TREASURY FINANCING OPERATIONS the changes] regulatory bank recent of effects [DEL: -11- AND POSSIBLE CREDIT MARKET DEVELOPMENTS, the Committee seeks to achieve bank reserve and money market conditions that will support [DEL: more] moderate growth in monetary aggregates over the months ahead [DEL: quarter]. third the in recorded than Alternative C To implement this policy, while taking account of TREASURY FINANCING OPERATIONS the regulatory bank recent of effects [DEL: changes] AND POSSIBLE CREDIT MARKET DEVELOPMENTS, the Committee seeks to achieve bank reserve and money market conditions that will support [DEL: moderate] more SLOWER growth in monetary aggregates over the months ahead than recorded quarter] third the in [DEL: INDICATED FOR THE SECOND HALF OF THIS YEAR. APPEARS CHART 1 STRICTLY CONFIDENTIAL(FR) 12/15/72 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS -133 -31 growth for -Dec. -127 L J S 1971 D M J 1972 S D I S N 1972 *Break in Series; Actual Level of RPO After Reduction in Reserve ReqJrements Effective November 9, 1972. **RPD Adlusted to Remove Discontinuty Introduced by Reduction in Reserve Requirements D J 1973 CHART 2 12/15/72 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS L^- 240 7% growth for Nov / - 40 -220 f< BROADER MONEY SUPPLY M2 (12/13.71 8% growth for growth 1971 1972 A S 0 N 1972 0 J 1973 CHART 3 STRICTLY CONFIDENTIAL (FR) 12/15/72 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 400 -380 112/13/72) 3160 1111 1 ; TOTAL RESERVES /13/72) i J Ij j 1971 Ii (12/13/72) / i 1972 A S 0 1972 1 N *Break in Series, Actual Level of Total Reserves After Reduction in Reserve Requirements Effective November 9, 1972 0 J '73 CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS PER CENT INTEREST RATES Short-term -- ^ ^"^^" INTEREST RATES Long-term WEEKLY AVERAGES FEDERAL MUNICIPAL Aaa WEDNESDAY ----- GOVERNMENT BONDb ''-" FRESERVES BILLIONS OF DOLLAI BORROWED I A~t~ *j, 20 YEAR AVERAGES \ i v , I "' - - NET BORROWED _L197 1971 1 II 1972II ll 1972 1971 1972 1971 1971 II 1972I 1972 PER CENT Table 1 STRICTLY CONFIDENTIAL (FR) December 15,1972 Bank Reserves Period 1972--July Aug. Sept. Oct. Nov. Dec. 30,365 30,555 30,903 30.975 29,313 (28,785) Annual Rates of Change 1971-*4th Qtr. 1972--1st 2nd 3rd 4th Qtr. Qtr. Qtr. Qtr. 1972--July Aug. Sept. Oct. Nov. Dec. Nov. -Dec. 1/ Weekly. 1972--Aug. Reserves Availale for Private Nonbank Deposits Seasonally Adjusted Not Seasonally Adjusted Actual Actual and and Projected Projected (2) (1) 2 9 16 23 30,166 30,253 30,615 30,844 29,372 (29,074) Aggregate Reserves Total Reserves (3) 33,138 33,382 33,360 33,788 31,843 (31,243) Required Reserves Seasonally Adjusted Time Nonborrowed Private and Reserves Demand Nondeposits (6) (4) (5) 32,924 33,016 32,802 33,205 31,191 (30,511) 21,052 21,131 21,306 21,248 19,396 (18,866) 9,136 9,249 9,408 9,491 9,572 (9,708) 6.8 4.8 2.2 0.5 16.4 10.8 7.1 10.0 (9.5) 10.1 12.8 3.6 (12.5) 11.0 13.0 -2.0 (12.0) 6.8 4.0 8.3 (8.0) 18.0 14.2 15.4 (11.5) 8,6 7.5 13.7 2.8 13.7 (12.0) (13.0) 2.9 8.8 -0.8 15.4 11.5 (11.5) (11.5) -1.6 3.4 -7.8 14.7 9.3 (9.0) ( 9.0) 10.2 4.5 9.9 -3.3 9.0 (17.0) (13.0) 10.2 14.8 20.6 10.6 10.2 (17.0) (13.5) U.S. Gov't. and Interbank (7) 2,774 2,826 2,457 2,813 2,530 (2,458) 30,570 30,434 30,563 30,278 30,822 30,373 30,075 30,421 30,027 30,368 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 Sept. 6 13 20 27 31,397 30,457 31,025 30,794 30,869 30,104 30,763 30,644 33,775 32,765 33,370 33,398 32,938 32,617 32,586 32,815 21,285 21,277 21,414 21,249 9,331 9,412 9,417 9,445 2,378 2.308 2,345 2,604 Oct. 4 11 18 25 30,925 31,099 30,772 31,076 30,890 30,661 30,891 30,771 33,806 33,828 33,802 33,764 33,379 33,276 33,388 32,837 21,293 21,230 21,241 21,258 9,443 9,461 9,505 9,492 2,882 2,728 3,029 2,688 Nov. 1 8 15 22 29 30,984 30,991 29,203 28,118 28,763 31,056 30,870 29,512 28,136 28,820 33,741 33,788 31,966 30,630 30,807 33,141 32,742 31,474 30,147 30,202 21,236 21,320 18,998 18,247 18,826 9,539 9,555 9,554 9,576 9,598 2,757 2,796 2, 763 2,512 2,044 Dec. 6 13 28,878 28,664 28,748 28,767 31,208 31,200 30,579 30,291 18,913 18,774 9,656 9,673 2,329 2,536 30 NOTE: Data shown in parentheses are current projections. 1/ At the FOMC meeting November 21, 1972 the Committee agreed on an RPD range of 6 to 10 per cent. Table 2 STRICTLY CONFIDENTIAL (FR) Monetary Aggregates (Actual and current projections, seasonally adjusted) Narrow Mononey Supply (M) Per id Broad ney Supply (M2) Adjusted Credit Proxy U.S. Govt. Deposits (1) (2) (3) Monthly Pattern in Billions of Dollars 1972--July Aug. Sept. Oct. eNov. Dec. 239.4 240.5 241,6 242.3 243.6 (245.1) 495.0 498.3 501.8 505.0 508.2 (512.5) (4) 5.3 4.6 5.3 6.1 7.8 (5.3) 386.3 389.3 392.6 395.5 399.4 (401.1) Total Time and Savings Time deposits other than CD's (5) (6) 293.7 297.1 300.5 303.4 305.9 (310.0) 255.6 257.7 260.2 262.7 264.6 (266.8) December 15, 1972 Negotiable CD's Nondeposit Sources of Funds (7) (8) 38.1 39.3 40.3 40.7 41.3 (43.2) 3.9 4.2 4.1 4.3 4.3 (4.4) Annual Percentage Rates of Change-quarterly and Monthly 1971--4th Qtr. 1972--let 2nd 3rd 4th Qtr. Qtr. Qtr. Qtr. 1972--July Aug. Sept. Oct. Nov. Dec. Nov.-Dec. 1.1 8.0 9.7 9.3 5.3 8.5 (7.0) 13.3 8.6 9.3 (8.5) 11.3 11.1 10.7 (8.5) 14.2 5.5 5.5 3.5 6.4 (10.5) (8.5) 11.3 8.0 8.4 7.7 7.6 (10.0) (9.0) 12.2 9.3 10.2 8.9 11.8 (5.0) (8.5) iii H:i::'li i il! iliii iiiii iiiiiii ii.ii ili iiiliili iiiiiliiiiii i il ifil : 15.9 14.7 14.8 15.7 13.2 (iiiiiiii 12.5) 17.1 11.8 10.1 (10.0) 11.6 13.9 13.7 11.6 9.9 (16.0) (13.0) 8.5 9.9 11.6 11.5 8.7 (10.0) ( 9.5) :::::;::::::; ::::::::::: ;::: ::::: :: :::::::::::::::;:: ............ ...... ...... Weekly Pattern in Billions of Dollars 7 19 2--Aug. 2 9 16 23 30 NOTES: 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 5.5 6.0 5.6 3.1 3.4 295.1 295.6 296.5 297.6 298.9 256.5 257.0 257.7 257.8 258.5 38.6 38.6 38.8 39.7 40.4 4.1 4.1 4.1 4.4 4.1 Sept. 13 20 27 242.6 241.5 241.6 241.1 502.2 501.2 501.6 501.5 390.9 391.9 393.2 392.4 4.4 4.9 5.9 4.7 299.4 300.1 300.3 301.2 259.6 259.8 259.9 260.4 39.7 40.4 40.3 40.8 4.0 4.1 4.1 4,2 Oct. 4 11 18 25 241.8 242.7 242.2 242.3 504.0 504.8 504.9 505.4 395.1 394.0 394.6 396.3 6.7 5,2 5.2 6.0 302.6 302.6 303.8 304. 1 262.2 262.1 262.7 263.0 40.4 40.5 41.0 41.0 4.2 4.1 4.2 4.5 Nov. I 8 15 22 29 p 242.1 242.7 244.3 244.3 242.8 505.4 506.0 508.5 509.4 508.3 397.5 397.7 396,6 400.4 400.9 7.2 8.0 5.5 7.0 8.8 303.9 304.4 305.1 306.7 307.3 263.4 263.3 264.3 265.1 265.5 40.6 41.1 40.8 41.6 41.8 4.6 4.0 4.3 4.4 4.4 Dec. 6 p 13 pe 246.1 245.2 512.2 511.6 402.8 401.9 7.8 7.4 308.4 309.4 266.0 266.4 42-3 43.1 4.3 4.4 .II flL S A ......................... Data shown in parentheses are current projections. pe - Partially estimated. Annual rates of change other than those for the past are rounded to nearest half per cent. STRICTLY CONFIDENTIAL (FR) DECEMBER 15, 1972 Table 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Bills & Accept. Open Marke.t Operations 1/ Coupon Agency RP' s3/ Ttal Daily Average Reserve Effect 2/ . Open Market AMember Other 4/ Operations Bank Borrowing Factors (6) (7) (8) Ain reserve categores . req. res. against available res. 5/ U.S,G. and interb. (6)+(7)+(8)-(9) (10) (9) .aret available Issues Issues (1) (2) (3) (4) Monthly 1972 - June 748 110 127 -1,205 -221 201 -25 -449 -315 42 15 July -543 -- -26 -- -570 463 108 - 89 145 337 360 Aug. Sept. Oct. Nov. Dec. -906 -158 Ill -548 116 -116 -51 - 3 -35 -22 157 816 -816 &#45;&#45;&#45; 22 -1,009 205 -442 135 1,370 -378 ,l,76 6p -60 -403 485 -47 7 p 194 232 320 -1,483p 221 444 -116 -20 -- 2,155 -1,380 2,357 -819 993 337 -201 -457 432 208 246 -229 1973 - Net (5) -238 -1,617 1,124 -22 6 p 237 76 59 32p -114 99 18 -119 -- -- -638 -757 -428 -101 917 158 25 -238 -- - 2 1,989 1,749 -186 331 -688 -423 -120 Nov. I 8 - 75 3 &#45;&#45;&#45; - 9 -- -1,028 1,084 -1,111 1,081 117 600 -210 404 242 -1,014 -136 176 285 -186 15 22 - 26 -415 -51 -- -166 -3,311 2,259 -3,389 2,010 -599 -307 -465 -75 -498 -1,211 -204 -217 29 -105 -- -694 -799 -219 I/ 2/ 3/ 4/ 5/ (11) 100 405 335 -760 -255 Tan Weekly Oct. 4 11 Dec. reserves 5/ 6 229 - 13 20 27 288 -- &#45;&#45;&#45; -14 153p 193 422 671p 15p 1,939 2,213 -42 8p 22 0p 2 - 2 7 p 47 1p 287 p 4 8 - 7 p 31 230 -1,358 -1,376 684p 9p -104p 60p 19p Represents change in 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 ih circulation, Treasury operations, F.R. float, gold and foreign accounts, and other FR accounts. Reserves to support private nonbank deposits. Target change for November and December reflects the mid-point of the target range adopted at the November 21, 1972 FOMC meeting. Target change for previous months reflects the bluebook patterns that are consistent with the mid-points of target ranges that were adopted during the month, STRICTLY CONFIDENTIAL (FR) DECEMBER 15, 1972 Table 4 SECURITY DEALER POSITIONS AND BANK RESERVES Millions of Dollars U.S. Govt. Security Dealer Positions Bills Coupon Issues Period Other Security Dealer Positions Corporate Municipal Bonds Bonds (3) (4) (1) (2) 1971 -- High Low 4,733 1,350 2,834 343 337 0 556 30 1972 -- High 4,291 1,585 235 1,916 -93 0 1971 -- Nov. 2,417 2,462 Dec. 2,544 1,761 1972 -- Tan. Feb. Mar. 3,004 2,408 3,489 Apr. May June July Aug. Sept. Member Bank Reserve Positions Excess Reserves (5) Borrowings at FRB (6) 590 -61 1,180 84 365 796 40 -133 201 328 170 251 1,416 1,176 604 135 149 101 2,612 2,792 2,694 274 675 205 2,262 2,643 4,099 Net Free Reserves (7) Basic Reserve Deficit 8 New York 38 Other (8) (9) 202 -988 -4,714 -1,545 -5,499 -2,569 959 380 -5,635 -4,833 12 -835 -1,638 -1,910 263 407 -144 -3,056 -4,063 165 107 50 -2,791 -4,375 206 136 185 173 124 249 20 33 99 153 91 150 -2,667 -3,203 -3,208 -4,192 -3,072 -3,522 46 123 87 99 134 260 136 104 204 109 119 94 27 -15 110 -3,026 -2,625 -2,828 -3,299 -2,652 -2,864 97 692 170 142 114 53 166 176 174 147 255 162 202 438 514 -55 -183 -352 -2,945 -3,913 -3,835 -2,603 -2,801 -4,024 2,887 *3,096 207 *1,039 105 84 132 191 247 418p 574 606p -347 -188p -3,637 -4,561 -4,044 -3,622 1972 -- Oct. 4 11 18 25 3,507 2,904 2,452 2,734 170 60 197 282 51 59 145 235 51 166 193 149 230 358 109 150 436 535 434 765 -206 -177 -313 -615 -3,248 -4,292 -4,319 -2,900 -3,354 -4,822 -4,445 -3,858 Nov. 1 8 15 22 3,114 2,520 2,531 *3,116 328 1,095 1,117 *1,079 0 31 36 121 173 254 126 136 205 124 786 189 555 959 494 419 -350 -835 292 -230 -3,272 -4,475 -4,902 -4,727 -3,225 -3,676 -3,707 -3,281 29 *4,158 *1,001 174 249 572p -218p -4,329 -3,709 Low Oct. Nov Dec. 6 13 20 27 :L Noces: e..o . . *3,899 *3,564 . * * - 938 975 -- l 85 75p -- - &#45;&#45;&#45; .. . 3 322 36 5p s.. -- a& t - 4 5 p 310p 243p J -- J . . 587p 807p . . 4 -277p -564p ..-1 J . ... 4 - ,28 p -5,635p .•I _ t . . Government Security uealer trading positions are of a colmtitment oasis. Lrading posil ons, wnicn excLuoe Ireasury Dills rlnance agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security The basic reserve deficit is excess reserves less borrowing at 'n syndicate, excluding trading positions. are debt issues still Weekly data are daily averages for statement weeks, except for corporate and municipal issues less net Federal funds purchases. are Friday figures. *STRICTLY CONFIDENTIAL -4,497p -4,707p oy repurcnase dealer positions Federal Reserve in syidicate which CONFIDENTIAL (FR) DECEMBER 15, 1972 Table 5 SELECTED INTEREST RATES Per Cent ... Short-term Periods Treasury bills 9T-day [ -year -year -day Federal Funds (1) (3) (2) New IsMunicipal Ut ey* Aaa Utility* 90-119 day 90-119 day Commercial CD's PoFeerale-nd Prie-NYC Paper I (4) Lon -term _ BMnniBuper Bond Buyer S. Gov't. (10-Yr. Constant Maturty FNMA Auction Yi Yields Maturlty Pri-NYC (5) (6) (7) (8) (9) 1971 -- High Low 5.73 3.29 5.47 3.32 5.94 3.53 5.88 4.00 5.75 3.63 8.26 7.02 6.23 4.97 6.89 5.42 8.07 7.32 1972 -- High Low 5.29 3.18 5.05 3.03 5.52 3.60 5.28 3.75 5.25 3.50 7.60 6.99 5.54 4.96 6.58 5.87 7.72 7.54 1971 -- Nov. Dec. 4.91 4.14 4.22 4.01 4.49 4.40 4.85 4.66 4.78 4.58 7.38 7.28 5.20 5.21 5.81 5,93 7.71 7.62 1972 -- 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 3.81 3.53 3.98 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 4.47 4.33 4.50 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 4.75 4.78 5.00 7.38 7.37 7.40 5.41 5.30 5.36 6.11 6.21 6.55 7.62 7.63 7.64 Oct. Nov. 5.04 5.06 4.74 4.78 5.39 5.20 5.21 5.18 5.19 5.13 7.38 7.09 5.19 5.02 6,48 6.28 7.71 7.70 4 LL 18 25 5.15 5.09 4.91 5.01 4.60 4.74 4.81 4.74 5.48 5.41 5.40 5.35 5.13 5.25 5.25 5.25 5.13 5.13 5.25 5.25 7.44 7.48 7.30 7.34 5.22 5.16 5.23 5.13 6.53 6.49 6.48 6.43 7.69 1 5.06 4.74 5.34 5.15 5.13 7.27 5.04 6.37 7.72 8 5.25 4.71 5.17 5.13 5.1J -- 5.10 6.29 15 22 29 4.89 4.97 5.03 4.74 4.79 4.87 5.18 5.17 5.26 5.13 5.23 5.25 5.13 5.13 5.13 7.12 6.99 7.05 5.01 4.96 4.99 6.25 6.26 6.29 6 13 20 27 5.17 5.29 4.94 5.05 5.25 5.27 5,28r 5.28 5.25 5.25 7.15 7 .21p 4.96 5.03 6.31 6.34p 1972 -- Oct. Nov. Dec. NU.O... 0 .. . : .... o .y l.. ti ~ W UWC * L & ~~~lU L.~U t U 7.72 7.71 7.69 7.67 .... ror columns o an ao Le ee y a a or c. umns 0 are statemeki t wee averages of ail data. IoLumn j is a one-oay weanesuay quote. weekly data is the mid-point of the calendar week over which data are averaged. Columh 7 is a one-day quote for the Thursday following the end of the statement week. Columft 9 gives FIA 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 commitmehts for Government underwritten mortgages. *NCw spries--Corporate New Issues Aaa series discontinued. Appendix Table I CONFIDENTIAL (FR) RESERVES AND MONETARY VARIABLES Reserves Period Total Nonborrowed Money Stock Measures Available to Support Pvt. Deposits Annually. M M1 (4) M 2 (5) 3 (6) December 15, 1972 Bank Credit Measures Adjusted Credit Proxy Total Loans and Investments Other Total Time (7) Time Other than CD's (10) Thrift Institution Deposits +7.6 -1.2 -6.0 +7.3 -5.6 -2.7 +9.2 +8.0 +8.6 -2.7 +8.1 +7.8 +7.8 +3.2 +5.4 +6.2 +9.3 +2.3 +8.1 +11.1 +8.3 +2.8 +7.8 +13.3 +5.2 +10.6 +5.6 +5.2 +5.8 +10.1 +10.9 +4.6 +10.0 +2.4 U.S. Gov't. Demand (14) (Dollar Change in Billions) (Per Cent Annual Rates of Growth) 1968 1969 1970 1971 CD's (12) Nondeposit Funds (13) +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 +17.5 +5.0 +10.3 +4.8 +11.4 +5.2 +10.8 +8.4 +26.3 +6.0 +15.6 +10.6 +15.5 +6.3 +17.0 +8.8 +9.7 +11.5 +10.6 +22.3 +12.2 +21.2 +10.1 +20.1 43,9 +8,8 +13.5 +4.1 +1.8 -0.8 +6.4 +3.4 +7.7 +2.8 -12.6 414.5 +7.9 +2.6 +13.0 -8.4 -7.6 -0.1 +0.3 +1.1 -0.3 +0.7 -9.1 -_ 1 +0.4 +0.7 Semi-Annually: 1st Half 1970 2nd Half 1970 +0.4 +11.6 +3.0 +15.2 1st Half 1971 2nd Half 1971 +9.6 4.7 +9.3 +6.5 1st Half 1972 +11.6 +12.1 +9.0 +7.4 +11.1 +13.4 +11.3 +12.8 +15.6 +14.7 +17.9 +3.7 +8.9 +10.0 +7.2 +2.2 +10 1 +12.8 +3.6 +9.5 +9.0 +6.0 +6.8 +11.0 +13.0 -2.0 +10.8 +10.6 +4.3 +4.8 +10.8 +7.1 +16.0 +9.1 +10.6 +3.7 +1.1 +9.3 +5.3 +8.5 +18.1 +12.4 +4.4 +8.0 +13.3 +8.6 +9.3 +18.9 +14.4 +7.8 +9.6 +15.5 +10.8 +11.6 +10.9 +8.4 +7.6 +9.7 +12.3 +10.3 +9.7 +11.1 +15.7 +9.5 +13.6 +28.8 +14.7 +27.5 +14.0 +21.9 +2.6 -2.4 +17.3 +13.7 +12.8 +20.5 +14.5 +1.3 +2.3 +0.3 +2.3 -0.4 July Aug. Sept. Oct. Nov. Dec. +4.4 +4.1 +12.9 -7.4 +3.4 +10.7 -7.6 +2.8 +22.9 -2.8 +2.0 +21.4 +6.8 +6.9 -0.8 +3.6 +5.9 +4.8 +10.1 +3.2 -2.1 +0.5 +7.5 +2.9 +2.9 +7.1 +6.5 +10.2 +10.5 +6.6 +6.2 +9.1 +8.7 +11.0 +10.7 +6.2 +11.9 +10.9 +11.9 +6.2 +14.9 +9.4 +4.2 +10.7 +17.1 +9.1 +20.8 Jan. Feb. Mar. Apr. May Juihe July Aug Sept. Oct. Nov. p +20.2 +23.1 -3.6 +13.3 +22.2 +7.5 +8.8 -1.6 +3.4 -7.8 +14.7 + 9.3 +9.2 +7.4 +15.6 +7.0 +6.2 +7.9 +8.6 +7.5 +3.2 +12.6 +11.9 +7.7 +7.6 +13.4 +14.3 +11.6 +7.2 +7.7 +10.6 +11.3 +8.0 +8.4 +7.7 +7.6 +15.4 +16.7 +13.8 +10.9 +9.7 +11.5 +13.5 +10.7 +10.4 +10.4 +9.1 +9.9 +14.2 +12.4 +19.9 +5.4 +70.0 +2.3 +10.2 +18.3 +11.9 +11.4 +20.6 +20.0 +16.2 +7.8 +12.4 +17.8 +16.3 +11.6 +13.9 +13.7 +11.6 +9.9 +4.7 +2.6 +11.9 -2.1 Quarterly, 1st 2nd 3rd 4th 1st 2nd 3rd 1971: 1972: NOTE: Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. 1971 1971 1971 1971 1972 1972 1972 -5.9 +15.8 +22.9 +6.9 +8.4 +2.9 +8.8 -0.8 +15.4 +11.5 +13.7 +2.8 +13.7 +2.6 +5.6 +14.2 +5.5 +5.5 +3.5 +6.4 Reserve requirements on Eurodollar borrowings are included beginning October 16, October 1, 1970. +11.3 +11.1 +10.7 +4.1 +7.9 +4.8 +11.2 +13.1 +5.9 +17.7 +13.5 +14.7 +4.7 +12.2 +9.3 +10.2 +8.9 +11.8 1969, ahd requirements +8.2 +15.9 +14.8 +15.7 +13.2 +5.3 +14.7 +17.1 +11.8 +10.1 +4.8 +3.2 +7.9 +13.7 +13.0 +17.0 +24.4 +15.4 +10.8 +7.8 +12.6 +14.8 +8.5 +9.9 +11.6 +11.5 +8.7 +15.7 +1.8 -0.1 +3.7 +3.2 +16.7 +10.3 +13.8 +13.0 +11.4 +13.7 +1.1 +0.4 +0.8 +1.1 -0.5 +23.9 +17.6 +19.0 +15.8 -0.2 +0.6 -0.4 +1.3 +1.6 +0.8 +1.0 +1.2 +1.0 +0.4 +10.6 +16.6 +18.3 +12.3 +15.8 +13.5 +10.4 +1.2 +0.6 on bank-related commercial paper are included beginning -0.1 -0.8 +0.8 +0.6 +0.9 -1.9 +0.7 +0.8 +0.1 -2.6 +2.4 +1.3 -2.1 -0.7 +0.7 +0.7 +1.7 Appendix Table II CONFIDENTIAL (FR) RESERVESANDMONETARY VARIABLES (Seasonally adjusted, billions of dollars) Money Stock Measures Reserves Period Total (1) Annually: nee. 1968 Available to Support pvt. Nonborrowed Deposits (3) (2) M1 Total IPvt. De. (4) (5 December15, 1972 Other Bank Credit Measures M2 (6) 3 (7) Adusted Credit Proxy (8) Total Loans and Investments (9) Total Time (10) Time Other than CD's (11) Thrift Institution Deposits (12) CD's (13) 27.249 27.977 29.132 26.471 26.829 28.764 24.963 25.245 26.747 197.4 203.7 214.8 378.0 368.8 418.2 572.6 588.3 634.0 304.6 305.4 330.6 29.390 29.600 29.779 28.958 29,240 29.445 26.930 27.132 27.470 215.3 217.7 219.7 423.1 430.4 437.1 642.2 653.4 663.9 333.4 336.7 339.6 443.6 449.0 452.4 234.4 240.2 245.4 219.2 223.0 226.8 26.6 27.5 28.1 29.991 30.327 30.527 29,859 30.106 30.106 27.735 27.935 28.199 221.2 223.8 225.5 441.5 446.6 450.6 672.5 681.0 687.8 342.0 344.5 346.7 455.2 458.9 464.1 248.1 251.3 254.4 231.0 234.4 237.2 27.8 28.5 29.4 30.639 30.743 31.073 29.915 29.985 30.556 28.358 28.521 28.503 227.4 228.0 227.6 453.4 454.5 455.6 693.8 697.6 701.2 349.8 351.0 353.3 466.5 471.1 475.4 256.4 257.3 259.6 240.4 243.1 245.6 30.4 30.8 31.6 30.882 30.970 31.246 30.485 30.535 31.079 28.588 28.728 28.844 227.7 227.7 228.2 458.3 460.8 464.7 706.5 711.6 718.1 354.7 358.0 361.9 480.1 482.6 488.6 263.3 265.3 269.9 248.3 250.8 253.4 32.7 32.2 33.4 1972--Jan. Feb. Mar. 31.772 31.616 32.032 31.678 31.582 31.931 29.0642 29.244 29.625 228.8 231.2 233.5 469.9 475.5 480.1 727.3 737.4 745.9 364.9 366.7 372.1 494.4 499.5 507.8 274.4 278.1 279.9 257.4 261.8 265.8 33.2 33.8 33.4 Apr. May June 32.643 32.830 33.059 32.525 32.728 32.967 29.798 29.951 30.148 235.0 235.5 236.6 483.0 486.1 490.4 752.7 758.8 766.1 376.3 380.9 382.4 510.1 518.6 519.8 282.8 287.0 290.9 269.7 272.6 275.7 34.7 36.3 37.1 July Aug. Sept. 33,138 33,382 33.360 32.924 33.016 32,802 30.365 30.555 30.903 239.4 240.5 241.6 495.0 498.3 501.8 774.7 781.6 788.4 386.3 389.3 392.6 524.2 532.2 537.5 293.7 297.1 300.5 279.7 283.3 286.6 38.1 39.3 40.3 33.788 31.843 33.205 31.191 30.975 29.313 242.3 243.6 505.0 508.2 795.2 801.2 395.5 399.4 542.6 551.9 303.4 305.9 290.1 293.0 40.7 41.3 33.775 32.765 33.370 33.398 32.938 32,617 32.586 32.815 31.397 30.457 31.025 30.794 242.6 241.5 241.6 241.1 502.2 i Dec. 1969 Dec. 1970 204.2 194.1 228.9 NonDeposit Funds U.S. Gov't. Demand (14) (15) 23.6 11.0 25.5 Monthly: 1971--.Tan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Oct. Nov. p Wekly: 1972--Sept. 6 13 20 27 Oct. 4 11 18 25 33.806 33.828 33.802 33.764 33.379 33.276 33.388 32.837 30.925 31.099 30.772 31.076 241.8 242.7 242.2 242.3 Nov. 1 8 15 22 29 p 33.741 33.788 31.966 30.630 30.807 33.141 32.742 31.474 30.147 30.202 30.984 30.991 29. 203 28. 118 28.763 242.1 242.7 244.3 244.3 242.8 31.208 30,579 28,878 246.1 Dec. 6 p :ii::::i 390.9 :::::::::::: 299.4 li) 391.9 300.1 300.3 301.2 501.2 501.6 ii':::; 501.5 iiiiiiii 392.4 504.0 504.8 504.9 505.4 [ii;!; 505.4 505.4 :::::::::: 97 397.5 iiiiiiii ::::::::::::: 303.9 506.0 508.5 509.4 508.3 397.7 387:: iiiiiiii 396.6 ::::: 400.4 400.9 304.4 305.1 306.7 307.3 308.4 512.2 393.2 !!) liiii iii ::: :::::: iiiiiii iiiH 395.1 394.0 394.6 396.3 402.8 39.7 40.4 40.3 40.8 ::I:::::::::: 302.6 302.6 303.8 304.1 . :::::: * ::::I: ' :::::: iiiiiiiiiii .iiiii!! 111. 111:!::: ..1 :::::::: I. 40.4 40.5 41.0 41,0 40.6 41.1 40.8 41.6 41.8 42.3 ::i::: ' iiiiiiiiiii ::::::::: iiiiiii11 ,.::::: : Reserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial paper, and Euro-dollar borrowings of U.S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily averages except for nonbank commercial paper figures which are for last day of month. Weekly data are not available for M 3 , total loans and investments and thrift institution deposits. p = Preliminary. NOTE: 

Federal Reserve (1972, December 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19721219

@misc{wtfs_bluebook_19721219,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1972},
  month = {Dec},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19721219},
  note = {Retrieved via When the Fed Speaks corpus}
}