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Content last modified 6/05/2009. (CONFIDENTIAL FR) February 8, 1973 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM February 8, 1973 CONFIDENTIAL (FR) MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) RPD and the money supply aggregates all appear to be growing at slower than expected annual rates during the January-February target period--well below the upper limits of the Committee's ranges of tollerance--as shown in the table below; Growth of Monetary Aggregates and RPD In January-February Period (SAAR in percentage points) Current Estimates Ranges of Tolerance RPD 4-1/2--10-1/2 7.0 Ml 3 --7-1/2 4.0 M2 4 --9 6.5 Memo: Federal funds rate federl f s 5-3/4--6-3/8 6.35 (week ending 1/31) 6.21 .(week ending 2/7) (2) The narrowly defined money supply showed no growth on average in January, partly reflecting a drop in State and local government deposits following a contra-seasonal rise in December when revenue sharing payments first began. It does not appear that dollar outflows abroad had much effect on recent M 1 behavior. Large outflows began only in early February, and the fragmentary data available for the first week of that month give no evidence of sizable shifts directly out of cash into foreign assets. ments in Mh When the erratic December-January move- are averaged together, they show an annual growth rate for the two months combined of about 6-1/2 per cent, about the same as the average rate for the past six months. (3) In the discussion at the last Committee meeting, it was noted that the upper limits of the ranges of tolerance adopted for growth rates in RPD and monetary aggregates were below those most likely to be associated with the then prevailing Federal funds rate of 5-5/8-5-3/4 per cent. In addition, the Committee recognized that any Desk action to slow growth in the aggregates would need to take place in the early part of the inter-meeting period, so that resulting upward adjustments in short-term rates would be largely completed before the January 31 announcement of terms on the Treasury refinancing. Finally, the Committee indicated a willingness to tolerate substantially slower expansion in RPD and the monetary aggregates if growth rates at given interest levels fell short of expectations. Given these guidelines, the Desk acted early in the inter-meeting period to tighten up on the provision of reserves through open market operations. (4) The tightening effects of Desk action were quickly reflected in the Federal funds rate which advanced to a little over 6 per cent in the statement week immediately following the meeting, and then into a 6-1/4--6-3/8 per cent range over the two succeeding weeks. After the start of the "even-keel" period, Desk reserve strategy was to achieve relative stability in money market conditions, with the Federal funds rate continuing to range generally between 6-1/4 and 6-3/8 per cent. Since the last meeting of the Committee, member bank borrowings have averaged about $1,2 billion. (5) The terms of the Treasury refinancing were initially well received, but between the announcement date and opening of books the market atmosphere surrounding the operation deteriorated. This seems to have been due partly to an initial assumption by market participants that the Federal funds rate and dealer financing costs would stabilize during the "even-keel" period at levels below those which actually developed. Also, with the dollar under attack in foreign ex- change markets, and rumors of a general rise in the bank prime rate, market expectations of future interest rate advances strengthened significantly (apart from expectation of a temporary decline in the bill rate as a result of foreign official demand for bills). Attrition in the rights exchange for new 3-1/2 year notes amounted to just under 50 per cent of public holdings of maturing issues. And in the cash auction, market professionals received an unexpectedly large 70 per cent of the new 6-3/4 year note. Most recently, the tone of the Treasury coupon market has improved and the new issues have risen in price. (6) The Treasury bill market has been greatly strengthened by the heavy speculative outflows of dollars. Foreign central banks receiving dollars have made, or are about to make, sizable acquisitions -4of Treasury debt, partly in the bill market but mainly from the Treasury in the form of special non-marketable certificates. In fact, foreign purchases of special Treasury certificates appear large enough to cover all of the Treasury's prospective March need for cash. This abrupt turn- around in the bill market outlook has been strongly reflected in bill yields. For example, the rate on 3-month bills, which had earlier reached a high around 5-3/4 per cent--some 50 basis points above the level prevailing at the last meeting--has most recently retraced most of this advance and is currently trading around 5.45 per cent. (7) Rates on other short-term market instruments have shown only little tendency to decline with the down-turn in bill yields. Advances in such markets since the last meeting generally range to about 40 basis points. In capital markets,'however, demands for funds have remained on the moderate side since the last meeting, and increases in yields have been limiteo in most cases to about 15 basis points. The roll-back of the prime rate increase at three banks in response to CID inquiries, and the abandonment of its rate formula:by the last of the "floating" banks, helped to moderate upward rate pressures in these markets. (8) The table on the following page compares recent changes in money and credit aggregates (seasonally adjusted annual raues) with those for selected earlier periods. Average for 1970 and 1971 Dec. '71 over Dec. '69 Year 1972 Dec. '72 over Dec. '71 Past 6 Months Jan. '73 over July '72 Past 2 Months Jan. '73 over Nov. '72 Past Month Jan. '73 over Dec. '72 Total reserves 6.8 10.6 13.7 22.8 36,0 Nonborrowed reserves 9.3 8.7 31,6 14.4 23.1 6.3 Reserves available to support private nonbank deposits 12.9 8.2 Concepts of Money M 1 (currency plus 8.3 demand deposits) 1/ M 2 (M1 plus time deposits at commercial banks other than large CD's) 10.4 10.8 M 3 (M2 plus deposits at th:ift institutions) 11,3 12.9 6.3 9.5 6.6 11.3 10.9 9.5 11.6 10.8 11.0 8.6 10.2 14.0 15.7 14.6 22.1 10.1 9,3 Bank Credit Total member bank deposits (bank credit proxy adj.) Loans and investments of commercial banks 2/ 18.3 Short-term market paper (Actual $ change in billions) Large CD's Nonbank commercial paper 0.3 2.4 3.1 6.1 3/ 0.4- 1.2 3/ 1.5- 3/ 1.17 1/ Other than interbank and U.S. Government. 2/ Based on month-end figures. Includes loans sold to affiliates and branches. 3/ Latest data December 1972. NOTE: All items are based on averages of daily figures, except for data on total loans and investmentsof commercial banks, commercial paper, and thrift institu. tions--uhich are either end-of-month or last Wednesday of month figures. .6Prospective developments (9) first Transaction demands for money will be expanding in half of 1973, 11 per cent. given the projected rise in the nominal GNP of almost However, the recent sharp further advance of short-term market interest rates will likely be acting to retard demand for money between now and mid-year. Thus, the financial relationships tabulated in the next paragraph for Committee consideration suggest that the longerrun target path that encompasses a 5--6 per cent annual rate of growth for ML might be attained with little change from current money market conditions (alternative B). Moving down into a 4--5 per cent growth rate range for M1 would likely involve a tightening of the money market over the next few weeks (alternative C), and moving up to a 6--7 per cent rate would probably entail an easing (alternative A). (10) The three alternatives are presented below in summary form (with figures for aggregates representing seasonally adjusted annual rates of growth). More detailed monthly and quarterly figures are shoan in the table on page 7. Alt. A Alt. B Alt. C Longer-run targets (represented by growth rates for first half of 1973) M1 6-7 5--6 4--5 M2 7--8 6-7 5--6 8--9 7--8 6--7 8--9 7--8 6-7 3-1/2--5-1/2 3-5 8--10 -4-1/2 to -2-1/2 1-1/2--3-1/2 7--9 6--8 7-1/2---9-1/2 5-1/2--6-1/4 6-1/2--8-1/2 5-7/8--6-5/8 5--7 6-1/8--6-7/8 Credit Proxy RPD Associated ranges for Feb.-Mar. 1973 Nonborrowed RPD RPD MI M2 Federal funds rate -10 to -8 1/2--2-1/2 Alternative Longer-Run Targets for Key Monetary Aggregates M1 M2 Alt. A Alt. B Alt. Alt. A Alt. B Alt. C C Adjusted Credit Proxy, Alt. A Alt. B Alt. C 1972 Dec. 255.5 255.5 255.5 525.1 525.1 525.1 406.4 406.4 406.4 1973 Jan. 255.5 257.3 259.3 255.5 257.2 258.9 255.5 Feb. Mar. 258.5 528.0 531.2 535.7 528.0 531.0 534.4 528.0 530.8 533.4 409.3 413.5 414.4 409.3 413.3 413.7 409.3 413.2 413.0 June 263.9 262.3 261. 1 545.7 542.6 539.1 422.8 421.2 419.3 257.1 Rates of Growth Quarters: 1973 Q 6.0 2nd. 0 7.0 1st. Months: Feb. Mar. 1972 5.5 5.5 4.5 4.0 8.0 8.0 7.5 6.5 8.0 7.5 7.0 6.0 6.5 4.5 7.5 7.0 7.5 6.5 6.0 10.0 7.0 7.5 8.0 8.0 11.5 1.0 12.5 2.5 STotal Reserves Alt..A Alt. B Alt. C Alt. A RPD Alt. B Alt. C Dec. 31,309 31,309 31,309 28,862 28,862 28,862 Jan. Feb. ha r. 32,249 31,697 31,791 32,249 31,678 31,717 32,249 31,659 31,647 29,418 29,214 29,41E 29,624 29,418 29,195 29,551 June 32,164 31,885 31,684 30,150 29,935 29,738 29,176 29,481 Rates of Growth Quarters: 1973 let. Q 2nd. Q 6.0 4.0 Months: Feb. Mar. _ -20.5 3.5 -- 5.0 2.0 -21.3 1.5 6.5 6.5 -22.0 - 6.5 10.5 7.0 9.5 5.0 8.5 3.5 -8.5 17.0 -9.0 14.5 -10.0 12.5 6.5 6.0 11.5 -0.5 -8(11) The Federal funds rate range shown for alternative B represents a range around the prevailing 6-1/4--6-3/8 per cent. The range for alternative C is meant to indicate, however, that the staff would expect the funds rate to move up from prevailing levels to close to the top of the range shown between now and the next Committee meeting, as reserve growth is constrained. Consequently, in alternative A, a movement of the funds rate down through the range shown would be anticipated. (12) Growth in H 1 in February-March is shown at a 7--9 per cent annual rate in alternative B and at close to those rates in the other alternatives. targets. These growth rates are more rapid than the longer-run Given prevailing interest rates, money balances are expected to pick up temporarily in February and March partly because of larger than normal payments of tax refunds. With the bulge in Ml growth in the period ahead, and taking account of the January weakness, first quarter would be around 5--6 per cent. expansion in the In the second quarter, as the refunds are phased out, continuation of an M 1 growth rate in this range seems likely at around current money market conditions, given the restrictive effect on money demand still being exerted by relatively high interest rates, (13) At the moment the 3-month bill is moving well below its normal relationship to other market rates because of foreign official demand for Treasury securities generated by large dollar outflow -Given the prevailing Federal funds ra-e range, the 3-month Treasury 'zllrate would be likely to move back to around 5-3/4 per cent as and when market purchases by foreign official institutions come to an end. A bill rate around 5-3/4 per cent would still be low relative to the funds rate, reflecting the concentration of demand in the Treasury area resulting from the international flows. The dollar outflows, while difficult to trace as to their source, probably came out of investments in domestic securities generally or bank loan proceeds, but there may also have been some temporary drawdown of existing cash balances. To the extent there is smaller volume of funds seeking investment in private short-term markets, short-term rates in those markets may continue under some upward pressures, particularly as further strong business loan demands on banks lead to aggressive bidding for CD funds. (14) Between now and the next Committee meeting, it is possible that the Treasury may not have to raise any net new cash, assuming they sell about $4-1/2 billion of special non-marketable securities to foreign official recipients of the recent dollar outflow. The mid-February refunding will be in the process of distribution during the period, but even-keel considerations should be minimal since the settlement date is on February 15, shortly after the Committee meeting. If the recent improved market atmosphere continues, distribution of the long note may be readily accomplished. (15) A tightening of the money market, such as might accompany alternative C, would probably lead to substantial upward adjustments in both short- and long-term interest rates. Under these circumstances the viability of the current discount rate and of CID efforts to defer increases in the prime loan rate would come more clearly into question. And there could be some acceleration of capital market borrowing, as -10corporations attempted to safeguard themselves against higher rates later or more stringent institutional borrowing conditions. Mortgage market conditions would also tend to tighten as interest rates reached the zone where a significant diversion of savings flows from banks and other savings institutions became increasingly probable. (16) The analysis of the preceding paragraphs has assumed that the dollar exchange crisis will soon abate. However, should it continue, or intensify, there is the possibility that domestic psychology would be affected as investors and businesses become increasingly uncertain about how monetary policy will be adjusted and as to the nature of possible changes in trade restrictions and exchange rate structure. Under those circumstances a sizable increase in domestic demands for liquidity, including possible cash balances, could develop on precautionary grounds. Depending on the particular problems at the time, policy may wish to consider accommodating such an increased precautionary demand rather than permitting the sharp rise in the Federal funds rate that could develop if the reserves necessary to support enlarged liquidity demands were not being supplied. -11- Proposed directive (17) 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, it is proposed to delete the reference to Treasury financing because the current financing will be substantially completed by the date of the Committee's meeting. Retention of the reference to credit market developments is proposed only for alternative C, the only alternative that contemplates a significant tightening of the money market. A reference to inter- national developments is suggested for the three alternatives because of the possibility that exchange market speculation, if continued, could have disturbing effects on market psychology generally, alter cash and liquidity demands, and/or distort the interest rate structure. Alternative A To implement this policy, while taking account of the- ortheeing-Treasry-f e g-and-pessibe-eredit-mske INTERNATIONAL developments, the Committee seeks to achieve bank reserve and money market conditions that will support ssteve growth in monetary aggregates over the months ahead than-oeeurred-iB-the-seeead-hasf-ef-Ist-year AT ABOUT THE AVERAGE RATES OF THE PAST 6 MONTHS. Alternative B To implement this policy, while taking account of the fortheeming-Tesse y-fiBeig-d-ssiie-eredit-iark INTERNATIONAL developments, the Committee seeks to achieve -12bank reserve and money market conditions that will support slevew MODERATE growth in monetary aggregates over the months ahead thaa eeeurred-in-the-seead-khal-et-last-year. Alternative C To implement this policy, while taking account of the fek4eeminag-T easury-Uiiaeig-and possible DOMESTIC credit market AND INTERNATIONAL DEVELOPMENTS, the Committee seeks to achieve bank reserve and money market conditions that will support SOMEWHAT slower growth in monetary aggregates over the months ahead than occurred iA-tke-seeeSd-hal-eI last-yeas ON AVERAGE IN THE PAST 6 MONTHS. STRICILY CONfiOENTIAL FR, CHART 1 2/9/73 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS 34 30 -32 29 30 4 1972 -28 I. S 1971 *Ereak in Senres D J ]I M Ji 1 [ J 1. t ] 1 I S 1972 ctual Level of RPD After Reductio n 1 1 0 t 1 M 1 4 J. N j!-^ J 1973 Reserve Requirements Effective November 9, 1972 J F 1973 CHART 2 STrCTILY CONFIDENTIAL (fR) 2/9/73 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS 7 5% growth for Dec -Feb 3% growth -255 -250 I I II 1 I I? "1 II 11 - BROADER MONEY SUPPLY M2 9% growth for Dec -feb growth I N 1972 1971 I J J F I A M 1973 A - M I CHART 3 STRICTLY CONFIDENTIAL (FR) 2/9/73 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS Of DOLLARS 1420 400 4 380 -41 360 J J - 1 ,, 1 ,i1 TOTAL RESERVES 33 31 I l j I 1971 * I I I IJ I___ i 1 J 1 I I 1 11 1972 eak in series Actual Leiei c Total i'eserves AtAt i 1973 Reductlon I I I N 0 1972 in Reserve Requirements EtHectln J F M 1973 November 9, 1972 A CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES INTFRFST RATES Shnrt tPrm nlTIONS PFR CFNT 1972' 1973o WvrFrY avrpTr,rv INTEREST RATES Long tprm PER CFNT FrKI Y 1971 1972 1973 Table 1 STRICTLY CONFIDENTIAL (Fit) Bank Reserves Reserves.Available Seasonally Adjusted Actual i-d - and ____er Pr ected (1) 30,890 30,973 29,496 28,862 1972--Sept. Oct. Nov. Dec 1973--Jan. Feb. 29.418 (29.195) .for Pr vate Nonbank Deposite Aggregate Reserve. (2) 30,609 30,830 29,529 29,211 30,391 (29.268) Reautred Raserve Seasonally Adjusted Not Seasonallv Adiusted Actual and rrojeced February 9, 1973 Total 1 Reservyes . Nonborrowed eerves Time ind Private I emand (3) 33,327 33,832 31,883 31,309 (4) 32,870 33,295 31,297 30,063 (5) 21,289 21,263 19,553 18,883 32,249 (31,678) 30,855 (30,268) 19,248 (18,985) . Nondeoetls (6) 9,411 9,473 9,600 9.739 9,900 (10,031) Annual Rates .of Clange 19/2--1st Qtr. 2nd Otr. 3rd Qtr. 4th Qtr. 10.6 6.6 9. 10.6 10.4 12.6 3.6 14.2 10.7 13.1 -0.4 4.8 1973--1st (9.5) (5.0) (0.5) (6.5) (16.5) 12.9 3.2 20.8 7.7 -1.9 18.2 11.4 12.5 -6.1 15.5 9.8 -10.9 8.8 -1.5 17.2 9.2 20.6 7.9 16.1 17.4 31.6 (-23.0) (4.0) 23.2 (-16.5J (3.0) 6.6 3.6 7.8 8.3 U.S. Interbank (7) 2,438 2,859 2,387 2,447 2,832 (2,484) 16.9 13.6 16.1 13.9 I. Qtr. 1972--Sept. Oct. Nov. Pec. 1973--Jan. Frh. Jan.-Feb. 23.1 (-9.0) (7.0) 36.0 (-21.0) (7.0) Gov't. and 19,8 (16.0) (18.0) iil.. iiii ! iiiJiig iiiiiiiiiiii iisHiliiiiiiii :!.; 111 tllllli I: ill ; 1 i!i iiiiiiiiiiill Ueekly: 197 -- Nov. 30,999 30,910 29,665 28,546 28,750 31,044 30,879 29,860 28,463 28,805 33,856 33,825 31.950 30,748 30,836 33,301 32,570 31,347 30,372 30,448 21,269 21,241 19,442 18,621 18,777 9,521 9,552 9,572 9,630 9,647 2,857 2,915 2,285 2,203 2,686 6 13 20 27 28,780 28,691 28,726 28,786 28,808 29,214 29,358 31,123 31,094 31,428 31,194 30,466 29,707 29,893 30,181 18.754 18,756 18,949 18,857 9,689 9,717 9,722 9,772 2,343 2,403 2,475 2,468 3 17 24 31 29,367 29,241 29.915 29,007 29,530 30,292 30,034 30,044 30,154 30,376 31,959 31,898 33,245 31,829 32,150 29,886 31,007 31,720 30,577 30,567 19,230 19,293 19,482 19,084 19,139 9,826 9.883 9,912 9,901 9,933 2,592 2,857 3,330 2,822 2,621 7 29,106 29,529 31,586 30,263 19,008 9,969 2.480 I 8 22 29 De. 1973--Jn. 10 Feb. 28,953 MOTE: Dta showf th parehthesoa are current projectlons. 1/ At the FMC meeting January 16, 1973 the Conmittee agreed on an RPD range of 6-1/2 to 10-1/2 per cent. Period Narrow Money Supply (M ) Table 2 STRICTLY CONFIDENTIAL (FR) Monetary Aggregates (Actual and current projections, seasonally adjusted) February 9, 1973 Broad Money Supply (M2 ) Adjusted Credit Proxy (1) I (2) (3) Monthly Pattern in Billions of Dollars 1972--Sept. Oct. Nov. Dec. 1973--Jan. Feb. (4) 250.1 251.6 252.7 255.5 512.1 516.4 519.8 525.1 394.5 398.6 401.9 406.4 5.1 6.3 6.9 6.5 255.5 (257.2) 528.0 (531.0) 409.3 (413.3) 7.1 (6.6) Annual Percentage Rate 1972--ist 2nd 3rd 4th II.S. Govt. Deposits Total Time and Savings Time deposits other than CD's (5) 301.9 304.8 308.4 312.8 317.0 (321.1) 272.6 (273.71 44.4 (47.3) 15.4 14.8 14.0 14.4 16.1 10.8 12.3 11.6 (14.5) (9.0) 8.7 10.1 7.9 12.2 9.5 11.9 10.5 13.4 12.0 11.5 14.2 17.1 10.2 12.8 10.4 11.2 1973--Jan. Feb. Jan.-Feb. (8.0) (4.0) 6.6 (7.0) (6.5) 8.6 (11.5) (10.0) 16.1 (15.5) (16.0) 13.4 (5.0) (9.0) Weekly Pattern in Billions of 399.9 401.4 400.2 402.3 402.7 5.9 7.4 6.1 6.7 7.3 306.0 307.4 307.9 308.8 309.6 265.9 15 22 29 518.0 518.7 520.3 520.4 519.2 6 13 20 27 254.1 253.9 256.5 256.9 522.1 522.0 525.9 527.3 404.2 403.9 406.3 407.9 7.5 6.2 5.9 6.1 310.0 311.2 312.8 314.3 268.0 1973--J3n. 3 258.2 254.6 255.7 255.1 254.4 530.2 526.2 528.5 528.0 527.9 412.0 407.4 409.4 409.3 409.8 8.6 7.2 6.8 6.9 6.7 315.5 315.6 316.7 317.5 319.0 272.0 271.6 272.8 272.9 273.4 255.6 528.5 410.6 5.7 320.1 272.9 17 24 P 31 p Feb. 7 pe NOTES: 4.1 4.3 4.3 4.4 4.5 (4.6) ::::::::::::::: .......... : 'ollars 252.1 252.4 253.2 253.0 251.5 10 (8) 39.8 40.0 41.2 43.2 7.2 7.2 5.2 13.3 Dec. (7) 262.0 264.8 267.1 269.6 1972--Sept. Oct. Nov. Dec. 1 Nondeposit Sources of Funds of Chlllgt--qlarterly and Monthly Qtr. Qtr. Qtr. Qtr. 1973--1st Qtr. 1972--Nov. Negotiable CD's 266.3 267.1 267.4 267.8 268.2 269.4 270.4 Data shown in parentheses are current projections, p - Prelimihary. pe Annual rates of change other than those for the past are rounded to nearest half per cent. Partially estimated. STRICTLY CONFIDENTIAL (FR) FEBRUARY 9, 1973 Table 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Bills & Accept. (1) Monthly 197 -- Aug. Sept. Oct. Nov. Dec. 1973 -- Jan. Feb. Mar. -906 -158 111 -548 450 Open Market Operations 1/ Coupon Agency RP's3/ Issues Issues Net (2) (3) (4) 116 -116 -51 -135 - 1,336 - 3 -35 -22 157 134 Total (5) Daily Average Reserve Effect 2/ Open Market ember Other 4/ Operations Bank Borrowing Factors (6) (7) (8) A in reserve categories req. res. against available res. 5/ U.S.G. and interb. (6)+(7)+(8)-(9) (9) (10) 816 -816 --147 22 -1,009 205 -442 596 -238 -1,617 1,124 -226 - 25 237 76 59 32 443 135 1,370 -378 -1,835 8 39 p 862 2,197 1,109 117 338p --14 -149 193 1,939 -1,325 -1,772 422 2,213 -1,502 -1,918 671 -428 507 -790 17 216 416 -103 ----- 3,680 -2,375 729 860 -581 4,194 -2,223 838 1,016 95 1,135 -150 341 141p 884p 633 -1,063 610 20 3 p 216p -605 1,115 552 -1,398p -l,101p 229 160 493 -570p -223p 934 -258 1010 -890p 2 22p - 2,493 -3,055 -1,020p - 80p 364p 1llp -84 p -- -54 -395 493 -651 -78 278p 188 224 312 -1,378 -343 1,286p Weekly Dec. 6 13 20 27 229 288 - 42 -294 --135 -- Jan. 3 10 17 24 31 514 152 109 156 676 --- 7 14 21 28 -561 -- Feb. 1/ 2/ 3/ 3/ 5/ - - - -407 271 -583 926 302 35 -66 -111 -21 24 466 144 7 Representq change in Sqlert's portfolio from end-of-period to end-of-period; includes redemptions in regular bill auctiohs. Represents change ih 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, P.R. float, gold and foreign accounts, and other FR accounts. Target change for January and February reflects the mid-point of the target range adopted at the Reserves to support private nonbank deposits. January 16, 1973 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. Trt availables/ reserves (11) 100 405 335 -1,520 -306 995 -715 STRICTLY CONFIDENTIAL (FR) February 9, 1973 Table 4 SECURITY DEALER POSITIONS AND BANK RESERVES Millions of Dollars Period U.S. Govt. Security Dealer Position Bills Coupon Issues Other Securityber Dealer Positions Corporate Municipal Bond xcess Bonds 1,180 84 202 -988 -4,714 -1,545 -5,499 796 -133 1,223 12 380 -1,070 -5,635 -1,638 -5,720 -1,910 206 136 185 173 124 249 20 33 99 153 91 150 -2,667 -3,203 -3,208 -4,192 -3,072 -3,522 274 675 205 99 134 260 136 104 204 109 119 94 27 -15 110 -3,026 -2,625 -2,828 -3,299 2,262 2,643 4,099 97 692 170 166 176 174 147 255 162 202 438 514 -55 -183 -352 -2,945 -3,913 -3,835 -2,603 -2,801 -4,024 2,887 3,096 3,510 207 1,039 953 132 191 291 247 314 200p 574 606 0 0 1, 5 p -327 -292 -850p -3,637 -4,561 -4,977 -4,044 -3,622 1971 -- High Low 4,733 1,350 2,834 343 556 30 1972 -- High Low 4,291 1,916 1.585 93 1972 -- Jan. Feb. Mar. 3,004 2,408 3,489 Apr. May June (5) (6) 590 - 61 383 40 1,416 1,176 606 2,612 2,792 2,694 July Aug. Sept. Oct. Nov. 1972 -- Dec. 6 13 20 27 1973 -- Jan, Feb. 3 10 17 24 31 7 14 21 28 I 3N (9) (4) 1973 -- Jan, Feb, York ytbdr (8) (2) Dec. 8 MNm Reserves a Reserves (7) (1) sotes: Bank Reserve Po ons r Bank Rerve Fogition Borrowings Net Free Basic Reserve Deficit 41 -2,652 -2,864 -4,958 p *3,407 * 720 177 3,899 3,564 3,114 3,520 938 975 849 1,107 322 383 260 197 589 805 1,221 1,118 3,718 3,212 *3,606 *3,527 142 150 193 224** 157 1,751 688 1,298 1,095p 1,311p -1,191 *3.118 871 843 * 652 * 687 * 659 -1,080P 8 77 p -4,480. -3,286p *2,293 * 642 120p 1,231p -1,118p -3,783p "------- -4,5 Y I -253 - -5,459p -4,233 -5,602 -4,899 -4,781 -*,415 -4,647 -5,476 -5,445 -562 -4,957 -5,189 957 -5,243 -5,116 -5,923 -6,044 -5,5993 -4,79 p -5,512p -561 -1,015 - -2,569 929 - Goverment Security dealer trading positions are on a coamitment basis. Trading positions, which exclude Treasury bills financed by repurchase Other security dealer positions agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. are debt issues stilt in syndicate, excluding trading positions. The basic reserve deficit is exces reserves less borrowing at Federal Reserve 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 ** Includes $132 million of Washington Metropolitan Transit Authority bonds. CONFIDENTIAL (FR) FEBRUARY 9, 1973 Table 5 SELECTED INTEREST RATES Per cent Long-term Short-term Federal Funds Periods (1) Treasury bills 90-day 1-year 90-119 day Commercial Paper 90-119 day CD's Prime-NYC w ssue iueunip AaNewUtility Bond Buyer U.SMuncpl ov't. (10-Yr. Constant Maturity FNMA Auction Yields (2) (3) (4) (5) (6) (7) (8) (9) 1971 -- High T.w 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 5.38 3.18 5.13 3.03 5.52 3.60 5.50 3.75 5.50 3.50 7.60 6.99 5.54 4.96 6.58 5.87 7.72 7.54 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. Dec. 5.04 5.06 5.33 4.74 4.78 5.07 5.39 5.20 5.28 5.21 5.18 5.40 5.19 5.13 5.38 7.38 7.09 7.15 5.19 5.02 5.05 6.48 6.28 6.36 7.71 7.70 7.67 1973 -- Jan. Feb. 5.94 5.41 5.58 5.76 5.75 7.38 5.05 6.47 7.68 1972 -- Dec. 6 13 20 27 5.17 5.29 5.38 5.34 4.94 5.05 5.12 5.13 5.25 5.27 5.21 5.31 5.28 5.28 5.45 5.50 5.25 5.25 5.38 5.50 7.15 7.21 --- 4.96 5.03 5.10 5.11 6.31 6.35 6.40 6.40 -7.67 -7.67 1973 -- Jan. 3 10 17 24 31 5.61 5.66 5.86 6.03 6.35 5.16 5.15 5.29 5.58 5.70 5.45 5.42 5.50 5.58 5.87 5.63 5.63 5.70 5.85 5.93 5 50 5.63 5.75 5.88 6.00 -7.29 7.45 7.40 7.36 5.08 5.03 5.00 5.08 5.16 6.42 6.43 6.46 6.50 6.57r -7.68 -7.68 -- Feb. 7 14 6.21 5.68 5.96 6.13 6.25 7.46 5.16 6.64p 7.69 21 28 Notes: Weekly data for columns I to 4 are statement week averages of daily data. Column 5 is a one-day Wendesday quote. For colums 6 and the Column 7 is a one-day quote for the Thursday following the weekly data is the mid-point of the calendar week Over which data are averaged. The PNMA auction yield is Column 9 gives FNMA auction data for the Monday preceding the end of the statement week. end of the statement week. the implicit yield in weekly or hi-weekly auction for short-term forward commitments for Government underwritten mortgages. CONFIDBITIAL (FR) Appendix Table I RESERVS AND MONETARY VARIABLES Res erves Total (1) Period Nonborro ed (2)- Money Stock Measures Available to Support Pvt. Deposits (3) Annually 1968 1969 1970 1971 1972 Semi-Annually. +7.5 -1.1 46.1 +7.2 +10.6 1st Half 1970 2nd Half 1970 +0.5 +11.5 1st Half 1971 2nd Half 1971 +9.7 +4.4 +,.1 -2,8 +9.6 +8.1 +7.1 Bank Credit Measures I _Other Adjusted Total Time Credit Loans and Total Other than 2 3 Proxy Investments Time CD's (4) (5) F (6) (7) (8) 1 9) 1 (10) (Per Cent Annual Rates of Growth) +11,0 +3.9 +8.1 +11.3 +14.0 +11.5 -4.8 +17.9 +18.2 +15,5 +11.2 +1.4 +11.1 +16.7 +13.3 +6.4 +3.5 +7.7 +17.5 +16.7 +2.9 -12.4 +14.4 +7,7 +10.1 +2.6 +13.0 -8.4 -7.6 40.4 -0.6 40.5 +1.1 -0,3 +0.4 +5.0 +11.8 +6.1 +5.7 +5.7 +10.8 44.8 +10.9 +5.0 +11.1 +5.2 +10.8 +5.1 +16.7 +3,5 +11,8 +2.8 +11.6 +7.2 -9.1 +1.0 +10.7 +3.4 +10.1 +3.0 +14.9 +7.4 +16.4 +9.8 +10.1 +8.4 +11.5 +10.6 +7.7 +27.0 +21.6 +13.4 +20.0 +12.1 +19.6 +14.0 44.3 +3.4 -7.1 -0.4 i1.4 +1.1 +10.8 +10.3 +13.0 +12.1 +11.4 +11.1 +12.8 +14,2 +15.4 +14.5 +13.7 +12.1 +17.3 +14.8 44.4 -0.3 +0.6 +0.4 +18.0 +14.1 +8.9 +10.5 +14.9 +10,7 +12.3 +11.5 +10.8 +9.1 +6.7 +9.8 +11.0 +11.5 +9.8 +12.1 +12.3 +10.3 +9.7 +11.1 +15.7 +9.5 +13.6 +14.4 +28.4 +13.7 +9.8 +16.6 +15.4 +14.8 +14.0 +14.4 +26.1 +13.1 +3.0 +1.3 +1.7 +1.8 +0.8 +3.7 +2.4 .2.6 +1,2 +1.1 +t5.9 +16.1 +10.8 +12.3 +11.6 +21.1 +17.1 +14.2 +13.3 +19,7 +14.3 +16.2 +13.0 -4.6 -2.6 -0.4 -0.4 +1.9 +9.2 +6.1 +8.2 +8.6 +17.1 +1 .1 +6.0 +8.7 +12.7 +8.5 +10.3 +10.2 +3.3 -0.3 -. 2 -0,4 +0.5 -1.1 +1.4 +5.1 +8.7 -4.3 +5.7 +5.3 -0.3 +8.3 +2.6 +1.5 44.1 -0.5 +2.0 +8.4 +5.0 +4.7 +9,3 +7,7 +8.9 +10.9 +8.1 +7.7 +11.0 +9.6 +10.6 48.2 44.8 +7.1 +7,4 +10.1 +11.6 +6.2 +11.9 +10.9 +11.9 +6.2 +14.9 +11.3 +7.5 +10.2 +17,1 +19.2 +18.9 +8.6 +8.0 +7.4 +14.7 +16.1 +16.4 +15.1 +12,9 +14.3 +16,2 +12,5 +12.8 4+0.8 40.1 40.7 +0.8 +26.7 -5.7 +11.0 +21,7 +9.4 +8.0 +2.9 +0.7 -6.1 +15.5 +9.8 -10,9 +11.0 +6.5 +13.4 +6.8 +3.9 +9.0 6.9 +9.7 +12.9 +3.2 +20.8 +7,7 +10.4 +15.1 +12.4 +7.9 +8.3 +9.2 +12.5 +9.3 +8.7 +10.1 +7.9 +12.2 +13.2 +16.8 +14.2 +10.7 +10.1 +11.1 +13.8 +11.6 +11.2 +12.0 +9.8 +12.2 +9.2 +7.2 +16.2 +12.2 +15.6 +6.6 +10.0 +9.6 +9.5 +11.9 +10.5 +13.4 +142 +12.4 +19.9 +5.4 +20.0 +2.3 +10.2 +18.3 +11.9 +11.4 +20.6 +10.7 +17.7 +16.2 +11.6 +12.8 +12.9 +13.6 +15.9 +12.0 +11.5 +14.2 +17.1 +19.2 +13.4 +13.2 +7.8 +13.0 +11.4 +12.3 +14,0 +10.2 +12.8 +10.4 +11.2 +23.3 +16.6 +18.2 +13.4 +12.6 +16.4 +16.7 +14.9 +16.3 +14.5 +12.1 +11.9 +0.1 +0.6 40.1 +1.5 +1.5 +0.7 +0.8 +31.6 +23.1 +10 +14.7 +11.5 +8.0 +4.0 +6.4 +12.7 +4.4 +7.2 +7.2 +5.2 +13.3 ** +6.6 +9.5 +8.6 +18.3 +16.1 +13.4 +17.2 +1.2 +4.3 +14.6 +9.6 +6.3 +8.9 +10.1 4+6.6 +6.0 +10.7 +13.1 -0.8 +4.8 +10.1 +11.1 +3.2 +3.6 +10.4 +6.6 +9.9 +10.6 +8.9 July Aug. Sept. Oct. Nov. Dec. +4.6 +2.2 +12.5 -5.5 44.0 +8.4 -0.1 -4.7 +24.6 -2.4 +3.3 +17.2 Jan. Feb. art. Apr. May June Jufly Aug. Sept. Oct. Nov. Dec. 21.8 -5.2 +14.5 +22.1 +8.8 +6.4 +5.2 +7.6 -1.9 +18.2 +11.4 +12.5 1973: Jan. p +3.60 NOTE: 1 (Dollar Change in Billions) +9.5 +0.4 +8.2 +9.4 +11.6 +9.0 +10.2 +6.5 +2.3 +10.4 +12.6 +3.6 +14.2 1972: (1) U.S. Gov't. Demand (14) +8.3 +2.9 +8.0 +13.5 +12.9 +7.7 19711 CD's (12) Nondeposit I Funds +9.3 +2.6 +8.4 +11.4 +10.8 +8.6 +10.4 1971 1971 1971 1971 1972 1972 1972 1972 I +7.8 +3.6 +6.0 +6.6 +8.3 +12.1 +2.0 lot Qtr. 2nd Qtr. 3rd Qtr. 6th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. Ath Otr. Thrift Institution Deposits (11) +8.1 -1.7 +8,6 +7.2 +9.7 +11.7 +9.0 1st Half February 9, 1973 +14.1 44.1 Reserve requirements on Eurodollar borrowings are included beginning October 16, October 1. 1970. 4.0 +5.7 '0.1 +1.0 40.8 +0.8 +0.2 +1 2 +1,9 -0.4 +0.1 +0.8 +0.5 +0,6 -0,:2 +1.4 -0.3 +0.1 .0.2 +0.2 40.1 +0.3 -0.1 +0.2 +0.1 40.3 1969, and requirements on bank-related eosoercial paper are included beginning +0,2 -1.7 +1.1 +1.1 +I.; 40.7 -1.3 -1.0 -0.7 40.6 41.2 +0,6 -0.4 +0,3 CONFDENTIAL (FR) Appendix Table II RESERVES AND MONETARY VARIAIBES (Seasonally adjusted, billions of dollars) Reserves Money Stock Measures Bank Credit Measures Available to NonTota l Period Adjusted Support Pvt. brroweotal IPvt De. (2) (3) (4) (5) 27,219 27,959 29,121 26,416 26,699 28,727 24,791 25,339 26,975 201.6 208.8 221.3 30,654 30,710 31,031 30,103 29.986 30,600 28,544 28,752 28,649 30,889 30,992 31,809 30,539 30,622 91,060 1972--Jan. Feb. Mar. 31,776 31,639 32,021 Apr. ay June July Aug. Sept. 2 February 9, 1973 3 _Other Time Total Credit Loans and roxvy Investmenta Total Other than Time CD'a Thrift Deposits CD's (8) (9) (10) (11) 577.2 594.0 641.3 306.6 307.7 332.9 390.6 406.0 438.9 204.2 194.4 229.2 180.9 183.5 203,9 460.0 461.9 463.7 700.1 704.8 709.3 352.1 353.5 355.6 466.5 471.1 475.4 256.3 257.9 260.1 225.9 227.4 228.8 240.1 242.8 245.6 30.4 30.5 31.3 4.3 3.9 4.1 183.5 183.3 183.4 467.3 470.3 473.8 715.8 721.5 727.7 357.8 360.8 364.3 480.1 482.6 488.6 263.8 266.7 270.9 231.6 234.7 237.9 248.5 251.3 253.8 32.1 32.1 33.0 4.8 5.4 4.0 236.2 239.1 241.4 183.3 185.8 187.7 477.9 483.9 488.9 735.7 746.0 754.8 367.1 369.3 374.3 494.4 499.5 507.8 274.9 278.6 281.3 241,7 244.8 247.5 257.8 262.1 265.9 33.2 33.7 33.8 4.0 3.6 3.7 29,824 29,920 30,144 243.0 243.8 245.1 189.1 189.6 190.7 492.1 495.5 499.3 761.5 767.9 775.0 378.1 383.0 385.1 510.1 518.6 519.8 284.3 288,6 291.7 249.1 251.8 254.2 269.4 272.4 275.7 35.2 36.8 37.5 3.5 3.7 3.8 33,018 33,038 32,870 33,295 31,297 30,063 30,317 30,562 30,890 247.7 248.6 250.1 193.1 193.8 194.8 504.5 508.4 512.1 783.9 791.5 798.9 388.3 391.4 394.5 524.2 532.2 537.5 295.0 298.9 301,9 256.8 259.8 262.0 279.5 283.1 286.8 38.3 39.1 39.8 3.9 4.2 4.1 30,973 29,496 28,862 542.6 551.9 556.8 304.8 308.4 312.8 264.8 267.1 269.6 290.5 293.7 296.7 40.0 41.2 43.2 4.3 4.3 4.4 29,418 806.9 813.5 821.8 828.3 398.4 401.9 406.4 30,855 195.9 196.5 198.7 198.4 516.4 519.8 525.1 32,249 251.6 252.7 255.5 255.5 409.3 565.3 317.0 272.6 300.2 44.4 4.5 33,856 33,825 31,950 30,748 30,836 33,301 32,570 31,347 30,372 30,448 30,999 30,910 29,665 28,546 28,750 252.1 252.4 253.2 253.0 251,5 196.7 196.2 197.1 196,6 195.4 518.0 518.7 520.3 520.4 519.2 399.9 401.4 400.2 402.3 402.7 306.0 307.4 307.9 308.8 309,6 265.9 266.3 267.1 267.4 267.8 40.1 41.0 40.8 41.4 6 13 20 27 31,123 31,094 31,428 31,194 30,466 29,707 29,893 30,181 28,780 28,691 28,953 28,726 254.1 253.9 256.5 256.9 197.7 197.2 199.7 199.7 522.1 522.0 525.9 527.3 404.2 403.9 406.3 407.9 iJilllll 4.6 4.0 4.3 4.4 4.4 4,4 4.4 4.2 4.4 4.6 3 10 17 26 p 31 p 31,959 31,898 33,245 31,829 31,150 29,886 31,007 11,720 30,'77 30,567 29,367 29,241 29,915 29,007 29,530 258.2 254.6 255.7 255.1 254.4 200.8 197.4 198.7 198.1 197.7 530,2 526,2 528.,' 528.0 527.9 412.0 407.4 409.4 409.3 409.8 315.5 272.0 43.5 315.6 ::: 44.0 271.6 316.7 272.8 " 9 ;i!iii";;: : 43.9 317.5 ::::4.5 272.9 ;::::::::: 45.5 .......................................... 319.0 273.4 (6) (7) 158.2 162.7 172.2 382.5 392.3 425.2 234.1 234.6 234.9 182.6 182.9 183.0 28,786 28,914 28,907 235.7 235.6 236.0 31,751 31,601 31,891 29,172 29,329 29,656 32,612 32,852 33,027 32,467 32,720 32,938 33,171 33,381 33,327 33,832 31,883 31,309 (1) bee. 1968 Dec. 1969 Dec. 1970 U.S. Non* Deposit Funds Institution Gov't. Demand Monthly: 1071--July Sept. Oat. Nov. Dec. Oct. Nov. Dec. 1973--Jan.p 528.0 Vaekly: 1972--ov. Dee. Jan. 1 8 15 22 29 :::::::: S h l 310.0 311.2 312.8 314.3 268.0 268.2 269.4 270.4 42.0 :"iiiii !;::F: 43.8 43.0 43.4 43.9 4.4 4.1 4.6 4.7 4.7 iiiiiiiiii ii :::::ih I--I ' ' ' ' ' -' - 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 comnercial paper, and Euro-dollar borrowings of U.S. banks. Weekly data are daily averages for statement weeks. Monthly data are da ly averages except for nonbank comercial paper figures which are for last day of month. Weekly data are not available for M3 , total loans and investments and thrift institution deposits. p - Preliminary. NOTE: 

Federal Reserve (1973, February 12). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19730213

@misc{wtfs_bluebook_19730213,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1973},
  month = {Feb},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19730213},
  note = {Retrieved via When the Fed Speaks corpus}
}