Bluebook

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Content last modified 6/05/2009. (CONFIDENTIAL FR) May 11, 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 May 11, CONFIDENTIAL (FR) 1973 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Both M1 and M2 appear to be expanding at annual rates somewhat above the upper ends of the Committee's April-May ranges of tolerance. Growth in RPD for the same period, however, seems to be falling short of its range, as shown in the table. The divergent tendencies evident in money supply and RPD expansion are attributable to a lower than anticipated average level of excess reserves in May; to greater than anticipated growth in currency, which swells M but does not absorb required reserves; and to a difference (still partly projected) in the weekly pattern of deposits from that projected earlier (which affects the required reserve component of RPD with a lag). Growth of Monetary Aggregates and RPD in April-May period (SAAR in Per Cent) RFD Current Ranges of Tolerance Estimates 10 - 12 8.0 M1 4 - 6 M2 4-1/2--6-1/2 7.0 8.0 Memo: Federal funds rate 6-7/8--7-1/2 Week Ending May 2: 7.43 May 9: 7.60 (2) The tendency for money supply growth to exceed the Committee's target ranges became evident soon after the last meeting, and the Desk, while -2taking account of even-keel, adopted a somewhat more reluctant reserve supplying strategy. This was expected to raise the Federal funds rate from the 6-7/8 to 7 per cent range prevailing at the time of the last meeting into a 7-1/4--7-1/2 per cent range. In the week ending May 2 the average funds rate rose to 7.43 per cent, and then in the most recent week to 7.60 per cent. During these two statement weeks, member bank borrowings averaged $1.7 billion, little different from the preceding four weeks. (3) The recent rise in the funds rate to more than 7-1/2 per cent reflected unexpected shortages in the supply of reserves arising partly from a large shortfall in float over the week-end of May 5, which was partly related to delays in transfers of funds to banks because of a computer failure. In response to developing money market tightness in the most recent period, the Desk supplied reserves mainly through repurchase agreements. The impact of the higher funds rate on market attitudes was blunted by the reserve supplying efforts of the Desk, by the relatively low volume of total dealer positions, and by the ready availability of dealer financing at favorable rates from non-bank institutions. (4) During most of the inter-meeting period, interest rates on market securities showed little net response to the rise in funds rate. the Federal While average issuing rates in the auction of the Treasury's new 6-7/8 per cent note and 7 per cent bond were apparently nudged upward, these securities dropped somewhat in yield in the immediate post-auction period, and yields on short-term bills declined about a quarter of a percentage point, with the 3-month issue moving to just under 6 per cent. This drop reflected both current and prospective shortages in the market -3supply of Treasury bills. In addition to the usual April and June redemptions of tax bills, the Treasury recently initiated a cut-back of its regular bill auction by $100 million a week; $1.7 billion of the maturing May securities will be redeemed--creating potential demands for bills; the rest of the May maturities were refunded into longer-maturity notes and bonds; and it was announced that the initial Treasury cash borrowing in the new fiscal year might not come until early August. (5) Following the 1/4 point rise in the discount rate to 5-3/4 per cent on April 23, a further increase to 6 per cent was announced Yesterday's announcement was received relatively quietly by Thursday. the market. Bill rates initially adjusted upward about 10 basis points, but rose further on Friday as the day progressed, perhaps in part due to persisting money market tightness on that day. recently was quoted 6.23 per cent bid. in Treasury and other bond markets. meeting, The 3-month bill most There were minor price declines On balance, since the last Committee corporate and municipal bond yields have changed little, while mortgage rates have edged up and longer-term Government securities have advanced about 1/8 of a percentage point in response to the Treasury's debt lengthening operation. (6) The table on the following page shows (in percentage annual rates of change) selected monetary and financial flows over various time periods. J - ~ Past 3 Calendar Years Dec. '72 over Dec. '69 - Past 12 Months Apr. '73 over Apr. '72 Past 6 Months Past 3 Months Past Month Apr. '73 Apr. '73 Apr. ' 73 Oct. '72 Jan. '72 Mar. '73 Total reserves 8.4 9.0 10.1 Nonborrowed reserves 8.8 2.8 0.5 Reserves available to support private nonbank deposits 9.0 9.7 1.2 12.6 -8.7 26.5 11.3 10.0 Concepts of Money M 1 (currency plus demand deposits)l/ 5.3 4.5 7.9 M2 (Ml plus time deposits at commercial banks other than large 11.3 9.0 7.7 6.4 8.3 12.8 11.0 9.5 8.1 8.3 Total member bank deposits (bank credit proxy adj.) 10.7 12.8 14.1 16.8 13.7 Loans and investments of commercial banks 2/ 12.4 15.3 16.8 16.1 6.4 CD's) M3 (M2 plus deposits at thrift institutions) Bank Credit Short-term market japer (Monthly ave. change in billions) Large CD's 3.1 Nonbank commercial paper 0. 1 4..8 -0.9 3.8 4 1/ Other than interbank and U.S. Government. 2/ Based on month-end figures. Includes loans sold to affiliates and branches. 3/ Less than $50 million. 4/ Latest data March, 1973. NOTE: All items are based on averages of daily figures, except for data on total insti-tuloons and investments of commercial ban-s, .commercial paper, and thrift tions--vhich are either end-of-month or last-Wednesday-of-month figures. Prospective developments (7) Alternative long run monetary objectives and associated short-run ranges of tolerance are summarized in the table below for Committee consideration. (More detailed figures are shown in the table on the following page). Alt. A Alt. B Alt. C M1 6--6-1/2 5--5-1/2 4--4-1/2 M2 7--7-1/2 6--6-1/2 4-1/2--5 9-1/2--10 9--9-1/2 8--8-1/2 8-1/2--9 7-1/2--8 6-1/2--7 Longer-run targets (represented by growth rates for 2nd and 3rd quarters of 1973) Credit proxy RPD Associated ranges for May-June RPD 10--12 9--11 7-1/2--9-1/2 M 5--7 4--6 3-1/2--5-1/2 1 M 6-1/2--8-1/2 5-1/2--7-1/2 4-1/2--6-1/2 6-3/4--7-1/2 7-1/4--8 7-1/2--8-1/2 2 Federal funds rate range (inter-meeting period) (8) Alternative B is consistent with the long run path for the aggregates (as indexed by M 1 growth of 5--5-1/2 per cent) adopted by the Committee at recent meetings. Attainment of these longer-run objectives might well involve some further tightening of the money market, with -5a- Alternative Longer-Run Targets for Key Monetary Aggregates Adjusted Credit Proxy M1 Alt. A 1973 Apr. May June Sept. Alt. A Alt. B Alt. C 542.3 Alt. C 536.3 539.6 541.2 426.4 429.2 434.1 426.4 429.2 433.8 426.4 429.0 433.0 549.1 545.5 442.3 441.0 439.2 258.3 259.6 260. 8 Alt. B 258.3 259.5 260.6 Alt. C 258.3 259.4 260. 3 Alt. A 536.3 539.9 543.0 Alt. B 536.3 539.8 264.6 263.5 262.4 551.7 Rates of Growth Quarters: 1973 2nd Q. 3rd Q. 6.5 6.0 6.0 4.5 5.75 3.6 8.0 6.5 6.5 3.0 12.0 7.5 11.5 6.5 11.0 5.5 Mwhths: May June 6.0 5.5 5.5 5.0 5.0 4.0 8.0 7.0 7.5 3.5 8.0 13.5 8.0 13.0 7.5 11.0 1973 Apr. May June Total Reserves Alt. b Alt. A 32,335 32,335 32,409 32,417 32,415 32,461 Sept. 32,704 32,543 Alt. C 32,335 32,401 32,343 Alt. A 29,869 30,021 30,409 IRPo Alt. B 29,869 30,014 30,363 32,343 30,946 30,786 Alt. C 29,869 30,005 30,292 30,586 Rates of Crowth Quarters: 1973 2nd 6.0 5.0 3rd 3.0 1.5 3.0 2.5 Montha: Tay June 1.5 4.5 2.5 -2.0 10.5 7.0 6.6 15.5 10.0 5.5 6.0 14.6 9.0 4.0 5.5 11.5 -6the funds rate between now and the next Committee meeting probably moving up toward the top of the 7-1/4--8 per cent range shown. This represents somewhat tighter money market conditions than were specified at the time of the last meeting as consistent with the given longer-run objectives for the aggregates. This specification of tighter money market conditions re- flects the greater strength of money supply in recent weeks and the sizable upward revision in the projection of nominal GNP for the second quarter. (9) in April. In May-June, M 1 growth is indicated to be less rapid than Income tax refunds will be tapering off in the forthcoming period, and growth will also be held down by the cumulative impact of past interest rate increases together with the restraint on reserve growth targeted. By the third quarter, a further modest slowing in M 1 growth would be needed to attain the longer-run target. This might be accomplished without any additional tightening in money market conditions beyond the 7-1/4--8 per cent funds rate range, particularly if, as projected, the rate of growth in GNP moderates. (10) Between now and the next Committee meeting the 3-month Treasury bill rate is likely to move back up into a 6-1/4--6-5/8 per cent range under alternative B. The recent rise in the discount rate and the somewhat tauter money market conditions anticipated will put pressure on dealer financing costs and will also give banks a further incentive to sell or liquidate bills as compared with other forms of adjustment. In addition, a $1--$2 billion drop in the Treasury balance at the Fed is anticipated prior to mid-June tax receipts and this will cause the System to sell more bills than otherwise into the market. The bill rate is unusually low relative to the funds rate, however. still expected to remain The Treasury's favorable cash position has enabled it to pay down maturing coupon issues and bills, and the Treasury has also stressed debt lengthening in its refunding operations. In this assessment of the bill market, we have not assumed any substantial reflow of funds from abroad. (11) Pressure on bank liquidity positions is expected to persist in the weeks ahead as bank lending continues to grow at a rapid pace. There has been some moderation of business loan demands as the shift of commercial paper borrowers to banks has abated. Nevertheless, the projected rapid rate of business inventory accumulation and large plant and equipment outlays indicate basic strength in credit demands. (12) These demands are likely to be financed in issuance of CD's in quarter pace. sizable volume, large part by though diminished from the record first If the cost of issuing CD's is increased (by raising reserve requirements), the amount of CD's issued will probably be cut back somewhat because of the higher effective rate, banks will shift to other forms of raising funds (such as selling securities), and lending terms to business may righten somewhat further. (13) The availability of bank credit to finance demands will also be dampened by an expected further slowing of net inflows of consumertype time and savings deposits as short-term interest rates edge higher. The staff has not assumed a rise in Regulation Q ceilings that pertain to such deposits. Given this assumption, a more marked slowing of consumer- type time deposit flows is anticipated around the mid-year interest crediting period and continuing into the third quarter, when Treasury bill rates are expected to rise further. (14) Long-term interest rates seem likely to rise somewhat under the conditions of alternative B partly as restraint on bank credit availability leads banks to participate relatively little in securities markets. as suppliers of funds Reduced flows of funds to nonbank savings institu- tions will also work toward upward pressure on mortgage rates and on debt markets more generally as Federal agencies offer sizable amounts of securities to help support the mortgage market. Demands on long-term bond markets, however, still appear quite moderate, and this may permit a rise in short rates to develop without significant impacts on long rates. But expectations are very important in the determination of long rates, and should monetary actions be interpreted as implying that credit will tighten substantially further, or remain tight for a more extended period than expected, (15) long rates could well come under more upward pressure. Alternative A indicates specifications that appear consis- tent with a policy move toward a higher growth rate for the aggregates than encompassed in alternative B. This alternative implies some easing of money market conditions in the weeks ahead. (16) Under alternative C, which moves toward a lower long-run growth rate for the aggregates, it would appear that the Federal funds rate would probably have to rise above 8 per cent over the period immediately ahead. Because of lags the main impact on M1 growth would not occur until the third quarter, when--to achieve the 4--4-1/2 per cent long-run objective--M1 growth would have to fall to a 3 per cent annual rate. M2 growth also would slow sharply, given the significantly higher short-term rates and assuming no increase in Regulation Q ceilings for -9consumer-type time deposits. Given the low growth rates for the aggre- gates expected for the third quarter under this alternative, the Committee may find it necessary to ease money market conditions in the course of summer if it desires to stay on the longer-run growth paths of alternative C thereafter. -10- Proposed directive Presented below are three alternative formulations for (17) the operational paragraph of the directive, which might be taken to correspond to the similarly lettered policy alternatives discussed in the preceding section. In light of the comments by a number of members at the previous Committee meeting about the disadvantages of using such qualitative terms as "moderate" or "modest" to characterize the desired growth rates in the monetary aggregates, such objectives have been expressed relative to the actual growth over the past 6 months. rates are shown in the table on page 4. These 6-month growth The diverse behavior of the various monetary aggregates, however, creates difficulties in characterizing future targets in the same way relative to past performance for all aggregates. (18) The 6 month comparison works quite well for M1, since the long-term target range specified under alternative B (5--5-1/2 per cent) and the short-run range of tolerance encompass the 5-1/4 per cent growth rate experience in the past 6 months; the ranges specified under A and C are, respectively, somewhat above and somewhat below the 6-month pace. For the bank credit proxy, actual growth over the past 6 months exceeds both the long-run target and near-term expectations under all three alternatives. For RPD and M 2 , the situation is a little more compli- cated, but for the most part the previous 6-month rates of expansion are above specifications in the three alternatives (with some exceptions in alternative A). -11(19) The directive language below attempts to take account of the differences in specified future movement of the aggregates relative to the past. As will be noted, an instruction to take account of credit market developments is included in alternative C since the relatively sharp tightening of money market conditions contemplated could lead to undesirably rapid adjustments in credit markets generally. Alternative A To implement this policy, [DEL: forthcoming of account taking while Treasury financing] the Committee seeks to achieve bank reserve and money market conditions consistent with SOMEWHAT FASTER aggregates] monetary [DEL: moderate]growth in [DEL: THE NARROWLY DEFINED MONEY STOCK over the months ahead THAN OCCURRED IN THE PAST 6 MONTHS ON AVERAGE BUT SOMEWHAT SLOWER GROWTH IN OTHER KEY MONETARY AGGREGATES. Alternative B To implement this policy, financing] Treasury [DEL: forthcoming of account taking while the Committee seeks to achieve bank reserve moderate] growth in and money market conditions consistent with [DEL: [DEL: aggregates] monetary THE NARROWLY DEFINED MONEY STOCK over the months ahead AT ABOUT THE AVERAGE RATES OF THE PAST 6 MONTHS AND SLOWER GROWTH IN OTHER KEY MONETARY AGGREGATES. -12Alternative C To implement this policy, while taking account of [DEL: forthcoming Treasury financing] CREDIT MARKET DEVELOPMENTS, the Committee seeks to achieve bank reserve and money market conditions consistent with SOMEWHAT SLOWER [DEL: moderate]growth in monetary aggregates over the monnths ahead THAN OCCURRED ON AVERAGE IN THE PAST 6 MONTS. STRICTLY CONFIDENTIAL(FR) 5/11/73 CHART 1 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS 12% growth for Apr i I J F 7 M 1973 S 1971 D M J 1972 D M J 1973 *Break in Series, Actual Level of RPD After Reduction in Reserve Requirements £ffective November 9, 1972 "t" i A M CHART 2 STRICTLY CONFDENTIAL (FR) 5/11/73 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS 6% growth for Apr 4% growth I i BROADER MONEY SUPPLY M2 6/ 2% g'oth for Apr i II N D 1972 1971 1972 1973 J F I /i M A 1973 M CHART 3 STRICTLY CONFIDENTIAL (FR) 5/11/73 MONETARY AGGREGATES BILLIONS OF DOLLARS /428 ADJUSTED CREDIT PROXY 2 -420 (5/9/73) - 400 TOTAL RESERVES -7) 1971 1972 * Bleak m sertes Actual Level of T1cal Reserves 1973 J F M A 1973 M After Reauction in Reserve Requiremen s Ettective November 9 1972 CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES CONDITIONS PER CENT 1971 1972 INTEREST RATES Long-term INTEREST RATES Short-term 1973 PER CENT FWEEKLY AVERAGES 1971 1972 3 WEEKLY 1971 1972 1973 TARLE STRICTLY CONFIDENTIAL --------------------- 1 MAY 11, BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) -------------------------------------------------- m-------- ---------------------------------------------- m--m----- 1) ARGRFGATE RESFRVFS I RFQUIRED RESERVES ---------------------II--------------------------------------II SEASONALLY AIJUSTEO -------------------------------------------------------------------------II-------------------------------TOTAL NONRORROWEn I PRIVATF nTHFW CU'S AND SEAS ADJ I NON SFAS. ADJ t RESFRVES RESERVES I OFMANn TIMF nEP NON DEP I RESERVES AVAILABLE FOR S PRIVATE NONRANK DEPOSITS PERIOD S MONTHLY LEVELS-SMILLIONSI ------------------------I 1973--JAN. 1 FEB. MA. APR. MAY (1) 29.411 29.296 29*622 29.869 (30014) I 1 (2) 30.384 29.369 29.360 29.902 (29851) I ANNUAL RATES OF CHANGE --------------------QUARTERLYt -- *- - -I 1972--4TH OTR. II I I 1 1973 (3) II II 9I 11 (1 9I i9 II I I (4) (5) ( ) GOV T AND INTERRANK (7) (8) I I 32.242 31.649 319999 329335 (32.409) 30.848 299787 29.526 30,178 (30.290) I 19.248 19.031 199021 18.870 (189943) 7.646 7.674 7.707 7.777 ( 79854) 29253 2.384 2v669 29970 ( 3.087) 2.832 2.353 2377 2.466 ( 2.396) 11 10.6 14.2 4,8 8.3 11.4 23.1 SII 1973--ST OTR. 2ND OTR. MONTHLYS 1973--JAN. FEB. MAR. APR. MAY APR.-MAY I I I I 10.5 10.0) APR. MAY 7 14 21 28 ( 22.8 *.7 13.4 10.0 6.0) I ( 8.0) 4 11 18 25 2 9 1 1 1 1 1 1 I I 8.8 5.0) 1 -7.1 16.5) 29167 29.111 299671 29.235 1 9 1 I I I 1 29.591 29.314 29.657 28.917 1 29.407 28.952 29.503 29,316 29.850 29.296 29.676 29.451 30.128 29366 29.831 309097 30.102 29.515 I 1 1 I 1 29.972 29.136 29.939 30.244 30.390 29.699 It 1 99 11 11 11 11 11 11 11 11 11 II 91 II 11 II I 2.9 0.5) ( 90.2 80.0) ( 13.5 4.4 5.2 10.9 12.0) ( 41.3 69.8 143.5 135.3 47.5) ( 11.5) ( 94.0) ( 7.7 q.5) 23.2 -13.5 -0.6 -9.S ( 4.5) -2.4) ( 1 I 99 I 1 MAR. ( 1 1 1 1 I YEEKLY LEVELS-SMILLIONS ----------------------I 7 FEB. 14 I 21 1 28 I 35.8 -22.1 13.3 12.6 3.0) 7.5) 31.3 -41.3 -10.5 26.5 ( 4.5) ( 1 15.b) 19.046 180957 19.143 189979 7.r70 7.6o8 7.646 7.%92 2.288 2.338 2.430 2.478 2.442 2.457 2.274 2.241 199243 18.953 199033 189P57 79686 7.693 7.773 7.713 2.524 2.603 29.71 2.799 2.455 29422 2.331 29248 30.579 299319 29.219 30.897 19.01? 18.767 18.909 18.781 7.742 7.769 7,758 7.761 2.850 29910 2o982 3.055 2.O01 29472 2.689 2,359 30.412 29.811 18.971 18.84? 7.468 7*416 3.011 390t2 2*269 2.797 319608 31.568 31.945 31.476 30.24 29,511 29.7A7 29.530 32.305 319718 32.006 31.699 30.238 29.148 28.679 2.350 32.628 31.838 32.519 32.4*6 32.371 32.312 1 1 1 ------------------------------------------------------------------------------------------------------------------------------------NOTEs DATA SHOWN IN PARENTHESES ARE CURRFNT PROJFrTIONS. 1/ AT THE FOMC MEETING APRIL 17. 1973 THE COMMITTEE AGREED ON A RPn RANAF OF 10 TO 12 PFM ChNI. TABLE 2 STRICTLY CONFIDENTIAL --------------------- MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ----------------------------- MAY 11, ADJUSTED) m---me mmmemmmemmmemmemmmmmememmmmmmmmmmmmmmmmmmmmmmmmm--------mm--m---------mwm- I I PERIOD I -- -- - -- - -- - -I I MONTHLY LEVELS-SRILLIONSI ----**------------* I 1973--JAN. FEB. MAR. APR. MAY 1 PERCENT ANNUAL GROWTH -------------------QUARTERLY --------1972--4TH QTR. I I I I 1973--IST OTR. 2ND OTR. I I MONTHLY ------1973--JAN. FEB. MAR. APR. MAY 1.7 1 6.0) I I I I I I I 1 I -0.5 6.1 -. 5 7.9 ( 5.5) I ( 7.0) I FEB. MAR. APR. 7 14 21 28 I 7 14 21 28 1 I I I I 4 I 11 18 1 25 PI 2 I I 6.4 5.9 4.7 8.3 ( 8.0) I ( 8.0) I 8.3 16.4 19.7 13.7 ( 8.0) 529.0 530.4 532.3 530.3 257.6 256.1 257.5 256.0 533.0 531.7 533.7 532.8 418.8 419.9 423.2 423.6 534.1 534.1 537.9 535.6 426.0 424.1 425.8 426.8 411.3 413.0 417.5 417.2 I 257.5 257.5 258.9 257.0 I I I P 259.5 9 PEI I 258.9 429.5 428.2 538.5 538.8 I 1 I1 15.7 21.6 30.9 21.0 15.0) (10.0) (18.0) ( 9.5) 320.1 322.2 323.? 325.0 272.8 274.0 274.1 274.4 6.3 8.1 8.0 327.5 330.1 331.4 333.2 275.3 275.6 276.2 276.8 7.7 5.4 4.6 6.1 334.3 335.6 337.1 337.5 276.6 P76.6 279.0 278.7 6.8 5.8 338.3 339.7 279.0 ?79.9 r II If SI (11.0) I I 9.5 ( 8.5) I NONDEPOSIT I SOURCES OF I FUNDS - -- - -- I I 4.5 I *.5 4.9 5.1 ( 5.0) I II II 256.3 256.4 258.3 255.9 I MAY I 23.1 (16.) 15.0 (11.5) I WEEKLY LEVELS-SRILLONS I -------------------- 5.7 ( 7.5) I 1 APR.-MAY MONEY SUPPLY I ADJUSTED II U.S. I TIMF AND SAVINGS OFPOSTTS NARROW I BROAD I CREDIT II GOVT. I I OTHER I (MI) I (M2) I PROXY II nEPOSITS I TOTAL I THAN CD S I rD S - -- - -- - -- - -- m - -- - -- - -- - -- - -- - -- - -- -- - -- - -- - -- - -(1) (2) (5) (6) (3) II (4) (7) I II I II II 255.4 527.9 I 409.2 1I 7.1 316.9 272.5 *A 44.4 256.7 530.5 414.8 i8 7.2 I 322.6 273.8 I 48.8 256.6 532.6 421.6 330.9 276.0 i4.9 1 7.5 I 258,3 536.3 426.4 5.8 II 336.7 278.0 58.7 (259.5) (539.8) (429.2) I1 ( 4.8) (340.9) (20.3) (60.6) I II I II I II I I I 8.6 10.2 12.1 II 14.4 11.6 I II II II I II II I 1 II I1 11 II I 1 II f II II 5.5 6.9 8.6 7.9 7 0 I 12.9 5.7 9.6 I I I I I I 47.3 48.? 49.1 I 'O.7 1 4.4 I 1 I 1 4.4 4.7 4.8 5.0 4.9 5.0 52.2 54.5 95.2 56.3 %7.7 I 4.5 4.9 59.0 1 58.1 98.f I 59.3 59. I I 4.9 5.2 5.4 5.2 4.9 I NOTEI DATA SHOWN IN PARENTHESES ARE CUPRFNT PROJECTIONS. P - PRELTMINARY PE - PARTTALLY ESTIMATED ANNUAL RATES OF CHANGE OTHER THAN THOSF FOR THF PAST ARE ROUNDEb TO THF NEAFRST HALF PERCENT. -- - -- - -- - - -- - -- - -- - - -- - -- - - -- - -- - -- - - -- - -- - - - -- - -- - - -- - -- - -- - - -- - -- - - 1973 STRICTLY CONFIDENTIAL (FR) MAY 11, 1973 Table 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Period Bills & Accept. (1) Open Market Operations 1/ Coupon Agency RP's 3/ Issues Issues Net - (2) (3) (4) Total Daily Average Reserve Effect 2/ Open Market A Member Other 4/ Operations Bank Borrowing Factors A in reserve categories req. res. against available res.5/ U.S.G. and interb. (6)+(7)+(8)-(9) ATarget available reserves (5) (6) (7) (8) (9) (10) (11) Monthly 1972 -- 1973 Nov. Dec. -548 450 -51 -135 157 134 -147 -442 596 -226 - 25 32 443 -1,835 839 -651 - 78 -1,378 343 -1,520 300 - Jan. Feb. Mar. Apr. 1,336 659 1,109 1,332 -196 -207 -18 -14 -19 862 -193 542 -414 2,197 644 1,636 1,106 1,116 146 1,689 1,323 117 428 265 -137 376 -1,794 -1,723 -884 278 -109 156 -74 1,331 -1,111 75 376 995 -1,140 40 505 May 200 June Weekly 1973 -- I/ 2/ 3/ 4/ 5/ -- --14 --- -1,856 1,827 -1,686 2,112 -2,015 2,259 -1,245 2,159 781 293 376 154 206 -197 648 -126 -215 -599 -617 -319 282 - 48 -144 -104 490 -455 551 -187 443 243 309 201 -207 -- 8 -- -1,212 -379 2,385 -2,020 -769 -144 2,694 -1,612 998 -572 743 266p -259 -252 343 -199p 209 - 36 -221 3 - 87p 292 - 24 62 -477p 656 -836 803 157p -- -16 -- 646 -41 1,102 368 467p 400p 22 8 472 409 p -386p - 73p -316p -llOp 647p 13 p -949p Mar. 7 14 21 28 -159 446 441 47 Apr. 4 11 18 25 May. 2 9 16 23 30 6 2 auctions. Represents change in System a portfolio from end-of-period to end-of-period; includes redemptions in regular bill 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 April and May reflects the target adopted at the April 17, 1973 FOMC Reserves to support private nonbank deposits. Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted during meeting. the month. STRICTLY CONFIDENTIAL (FR) MAY 11, 1973 Table 4 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of Dollars U. S. Govt. Security Dealer Positions Period Bills (1) 1972 Coupon Issues (2) Other Security Dealer PositionsMember Corporate Bonds Municipal Bonds Member Bank Reserves Positions Bank Reserves Positions Excess Reserves Borrowings at FRB Total Seasonal (4) Basic Reserve Deficit 8 New York | 38 Other (8) (9) -- High Low 4,291 1,916 -1,585 -93 383 40 1,223 12 -5,635 -1,638 -5,270 -1,910 1973 -- High Low 3,718 1,683 1,125 -96 244 55 2,139 688 -5,243 -1,820 -7,093 -4,839 1972 -- Apr. May June 2,612 2,792 2,694 274 675 205 136 104 204 109 119 94 -3,026 -2,625 -2,828 -3,299 -2,652 -2,864 July Aug. Sept. 2,262 2,643 4,099 97 692 170 147 255 162 202 438 514 -2,945 -3,913 -3,835 -2,603 -2,801 -4,024 Oct. Nov. Dec. 2,887 3,096 3,510 207 1,039 953 247 314 219 574 606 1,049 -3,637 -4,561 -4,977 -4,044 -3,622 -4,958 Jan. Feb. Mar. 3,407 2,132 2,490 720 562 -50 342 205 295 1,165 1,593 1,858 -4,550 -4,187 -4,273 -5,469 -5,436 -5,847 Apr. *2,457 -3,293 -6,577 1973 -- 1973 -- Notes: *106 341 23 249 93 1,688 1,491 2,139 2,013 -3,760 -4,883 -4,719 -4,062 -6,235 -5,920 -6,075 -5,269 72 190 *104 * 12 537 -86 234 388p 1,754 1,502 1,845 1,646p -3,577 -4,227 -4,121 -2,392 -5,933 -7,093 -6,676 -6,908 *221 *809 215p -151p 1,874p 1,488p -1, 0p -3,465p Mar. 7 14 21 28 1,976 1,973 2,740 3,028 11 -73 -96 -83 Apr. 4 11 18 25 3,142 2,549 *2,477 *2,222 May 2 9 16 23 30 *1,969 *1,788 82 Government Security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury bills financed agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security are debt issues still in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at less net Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate and municipal issues which are Friday figures. *STRICTLY CONFIDENTIAL 74 -5,5 p 5 75 5 - , p by repurchase dealer positions Federal Reserve in syndicate CONFIDENTIAL (FR) MAY 11, 1973 Table 5 SELECTED INTEREST RATES Per Cent Period Federal Funds (1) Treasur 90-day (2) bills -year (3) Slort-term______ 90-119 day Commercial Paper (4) CD's Prme - N 90-119 day 60-89 day (5) (6) ll Aaa Ut ht New Recently Offered Issue (7) (8) Municipal Bond Buyer (9) . arm U.S. Government Constant (10-yr. Maturt F (10) Auction Yields ds (11) 1972 -- High Low 5.38 3.18 5.13 3.03 5.52 3.60 5.50 3.75 5.38 3.13 5.50 3.50 7.60 6.99 7.46 7.12 5.54 4.96 6.58 5.87 7.72 7.54 1973 -- High Low 7.60 5.61 6.44 5.15 6.71 5.42 7.13 5.63 7.25 5.38 6.75 5.50 7.52 7.29 7.60 7.26 5.35 5.00 6.80 6.42 7.92 7.69 1972 -- 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 4.34 4.15 4.38 4.47 4.33 4.50 7.45 7.38 7.32 7.40 7.38 7.36 5.43 5.31 5.34 6.19 6.13 6.11 7.58 7.63 7.63 1973 -- 1973 -- July 4.55 3.98 4.90 4.83 4.63 4.75 7.38 7.37 5.41 6.11 7.63 Aug. Sept. 4.80 4.87 4.02 4.66 4.90 5.44 4.75 5.07 4.65 4.88 4.78 5.00 7.37 7.40 7.34 7.42 5.30 5.36 6.21 6.55 7.63 7.65 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 5.00 5.00 5.19 5.19 5.13 5.38 7.38 7.09 7.15 7.38 7.18 7.18 5.19 5.02 5.05 6.48 6.28 6.36 7.72 7.71 7.68 Jan. Feb. Mar. 5.94 6.58 7.09 5.41 5.60 6.09 5.58 5.93 6.53 5.76 6.17 6.76 5.63 6.16 6.78 5.75 6.28 6.75 7.38 7.40 7.49 7.35 7.41 7.51 5.05 5.13 5.29 Apr. 7.12 6.26 6.51 7.13 7.04 6.75 7.48p 7. 5.15 6.46 6.64 6.71 6.67 7.69 7.72 7.78 7.89 Mar. 7 14 21 28 7.02 7.13 6.96 7.11 5.83 5.92 6.25 6.28 6.27 6.44 6.69 6.64 6.40 6.65 6.88 7.00 6.63 6.63 6.88 7.00 6.75 6.75 6.75 6.75 -7.52 7.45 -- 7.50 7.60 7.53 7.44 5.27 5.34 5.35 5.26 6.67 6.72 6.76 6.71 7.75 Apr. 4 11 18 7.18 6.84 7.23 6.44 6.26 6.18 6.71 6.43 6.41 7.08 7.13 7.13 7.13 7.00 7.00 6.75 6.75 6.75 7.51 --- 7.43 7.47 7.52 5.22 5.07 5.17 6.70 6.64 6.64 7.86 25 7.14 6.22 6.57 7.13 7.05 6.75 7.45 7.42 5.14 6.68 2 9 16 23 7.43 7.60 6.24 6.10 6.57 6.52 7.13 7.13 7.25 7.25 6.75 6.75 7.40 -- 7.42 7.45p 5.10 5.10 6.75 6,80p May 30 Notes: ___ 48 p __ Weekly data for columns 1 to 4 are statement week averages of daily data. Columns 5 and 6 are one-day Wednesday quotes. For columns 7, 8 and 10 the weekly date is the mid-point of the calendar week over which data are averaged. Column 9 is a one- day quote for the Thursday following the end of the statement week. Column 11 gives FNMA auction data for the Monday preceding the end of the stat ement week. The FNMA auction yield is the yield in the bi-weekly auction for short-term forward commitments for Government underwritten mortgages. 7.81 7.89 7.92 Appendix Table I CONFIDENTIAL (FR) RESERVES AND MONETARY VARIABLES May 11, 1973 Money Stock Measures Reserves Period Total (1) (2) Available to Support Pvt. Depoits (3) )Nonborrowed 2 (4) (5) . (6) Bank Credit Measures Adjusted Total Credit Loans and . ProxV Investents (7) (8) Time Total Other than Time . 's (9) (10) Other Thrift Institution Depets (11) (Per Cent Annual Rates of Growth) . 's (12) Nondeposit ts (13) U.S. Gov't. D fd (14) (Dollar Change in Billions) Annually: +7.5 -1.1 +6.1 +7.2 +10.6 +5.3 -2.8 +9.6 +8.1 +7.1 1st Half 1971 2nd Half 1971 +9.7 +4.4 Ist Half 1972 2nd Half 1972 1968 1969 1970 1971 1972 +8.1 -1.7 +8.6 +7.2 +9.7 +7.8 +3.6 +6.0 +6.6 +8.3 +9.3 +2.6 +8.4 +11.4 +10.8 +8.3 +2.9 +8.0 +13.5 413.0 +9.5 +0.4 +8.2 +9.4 +11.6 +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 +16.8 +2.9 -12.4 +14.4 +7.7 +10.1 +2.6 +13.0 -8.4 -7.6 +0.4 +9.6 +6.3 +10.7 +3.4 +10.1 +3.0 +14.9 +7.4 +16.4 +9.8 +10.1 +8.4 +11.5 +10.6 +21.6 +13.4 +20.0 +12.1 +19.6 +14.0 +4.3 +3.4 -7.1 -0.4 -1.4 +1.1 +11.7 +9.0 +12.1 +2.0 +8.6 +10.6 +7.7 +8.5 +10.8 +10.3 +13.0 +12.1 +11.4 411.1 +12.8 +14.2 +15.4 +16.5 +13.7 +12.1 +17.3 +15 0 +4.4 +5.7 -0.3 +0.6 +0.4 +6.5 +2.3 +6.6 +6.0 +3.2 +3.6 +4.1 +1.9 +6.0 +8.7 +8.9 +10.5 +6.7 +9.8 +9.7 +11.1 +9.8 +16.6 +8.0 +14.2 +13.3 +1.7 +1.8 -0.4 +1.1 +15.9 1972 1972 1972 1972 +10.4 +12.6 +3.6 +14.2 +10.7 +13.1 -0.8 +4,8 +10.4 +6.6 +9.9 +10.6 +9.2 +6.1 +8.2 +8.6 +12.7 +8.5 +10.3 +10.2 +14.9 410.7 +12.4 +11.5 +11.0 411.5 +9.8 +12.1 +15.7 +9.5 +13.6 +14.4 +15.4 +14.8 +14.0 +14.4 +16.1 +10.8 +12.3 +11.6 +19.7 +14.3 +16.2 +13.2 +0.8 +3.7 -0.3 +2.4 +3.3 +0.4 +0.3 -0.4 +0.5 -1.1 +1.4 1st Qtr. 1973 +8.8 -7.1 +10.5 41.7 +5.7 + 8.6 +15.0 +20.3 +23.1 +9.5 +11.7 +0.5 +0.9 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. +21.8 -5.2 +14.5 +22.1 +8.8 +6.4 +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 +1.0 +14.7 +11.5 +8.0 +4.0 +6.4 +12.7 +4.4 +7.2 +7.2 +5.2 +13.3 +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 +13.9 +11.6 +11.2 +12.0 + 9.8 +12.4 +9.2 +7.2 +16.2 +12.2 +15.6 +6.6 +10.0 +9.6 +9.5 +11.9 410.5 +13.4 +14.2 +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 +18.2 +12.9 +13.6 +15.9 +12.0 +11.5 +14.2 +17.1 +19.2 +15.4 +13.2 +7.8 +13.0 +11.4 +12.3 -0.1 -0.3 +0.1 -0.2 +0.2 +0.2 -1.7 +1.1 +1.1 Jan. Feb +35.8 -22.1 +13.3 +12.6 +31.3 -41.3 +22.8 -4.7 +13.4 +10.0 -0.5 +6.1 -0.5 +8.0 +6.4 +5.9 +4.8 +8.3 +9.8 +9.0 +6.9 +8.3 +8.3 +16.4 +19.7 +13.7 +18.6 +21.9 +19.4 +6.4 +15.7 +21.6 +30.9 +21.0 -0.6 +0.5 +1.1 -0.3 +0.4 Semi-Ahnually* Quarterly: 3rd Qtr. 1971 4th Qtr. 1971 let 2nd 3rd 4tb Qtr. Qtr. Qtr. Qtr. 1972: 1973: Mar. Apr. NM TE +5.2 +7.6 -1.9 +18.2 +11.4 +12.5 -10.5 +26.5 Reserve requirements of Eurodollar borrowtlgs are included begifhing October 16, October 1, 1970. p - Prel tinary. 1969, am +13.6 +0.1 +10.2 +12.8 +10.4 +11.2 +23.3 +16.6 +18.2 +13.4 +21.6 +16.9 +16.7 +14.9 +16.3 +14.5 +12.3 +12.5 +12.9 +5.7 +9.6 +8.7 +19.4 49,1 +11.7 +5.0 +14.0 requireents on batik-related +0.6 +0.1 +1.5 +1.5 +0.7 +0.7 +0.1 +0.3 -0.1 40.2 -1.3 -1.0 -0.7 +0.6 +1.2 +0.6 +1.9 +0.1 -0.4 +1.2 +4.5 +6.1 +3.8 +0.1 +0.5 +0.2 +0.2 -1.6 +0.8 +0.8 +0.8 +0.2 +1.2 +0.4 +0.2 conaercial paper are itcluded beginning Appendix Table II CONFIDENTIAL (FR) May 11, 1973 RESERVES AND MONETARY VARIABLES (Seasonally adjusted, billions of dollars) Period Annull y: Dec. 1968 Total 1l) oonborro () Dec. 1969 Dec. 1970 27,219 27.959 29,121 Bank Credit Measures Adjusted Tota Credit Loans and Total Proxy Inveatmente Time (0)' (8) (9) loney Stock Measures Reserves Available to Support Pvt. Depoits otl Total t. Prt. e. 3 2 (3) (4) (5) 26,416 26,699 28,727 24,791 25,339 26,975 201.6 208.8 221.3 158.2 162.7 172.2 382.5 392.3 425.2 (6) (7) 577.2 594.0 641.3 306.6 307.7 332.9 390.6 406.0 438.9 Time Other than CD's lit) Other Thrift Institution Deposts Cs ( ii (13) 180.9 183.5 203.9 194.7 201.7 216.1 23.3 10.9 25.3 Deposit Fuds 7.0 20.0 11.6 -Dec. 31,209 31,060 26,907 236.0 183.4 473.8 727.7 364.3 488.6 270.9 237.9 253.8 33.0 4.90 1972--Jan. Feb. Mar. 31,776 31,639 32,021 31,751 31,601 31,891 29,172 29,329 29,656 236.2 239.1 241.4 183.3 185.8 187.7 477.9 483.9 488.9 735.7 746.0 754.8 367.1 369.3 374.3 494.4 499.5 507.8 274.9 278.6 281.3 241.7 244.8 247.5 257.8 262.1 265.9 33.2 33.7 33.8 4.0 Apr. May June 32,612 32,852 p3,027 32,467 32,720 32,938 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.Q 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 July Aug. Sept. 33,171 3,381 3,327 33,018 33,038 32,870 30,317 30,562 30,890 247.7 250.1 193.1 193.8 194.8 504.5 508.4 512.1 784.0 791.6 799.0 388.3 391.4 394.5 524.2 532.2 537.5 295.0 298.9 301.9 256.8 259.8 262.0 279.6 283.2 286.9 38.3 39.1 39.8 3.9 4.2 4.1 Oct. Nov. Dec. S3,832 )1,883 B1,309 33,295 31,297 30,063 30,973 29,496 28,862 251.6 252.7 255.5 195.9 196.5 198.7 516.4 519.8 525.1 807.0 813.6 822.0 398.4 401.9 406.4 542.6 551.9 556.8 304.8 308.4 312.8 264.8 267.1 269.6 290.6 293.8 296.9 40.0 41.2 43.2 4.3 4.3 4.4 1973--Jan. Feb. 2,242 1~,649 1,999 32,335 30,848 29,787 29,526 30,178 29,411 29,296 29,622 29,869 255.4 256.7 256.6 258.3 198.4 199.3 198.7 199.7 527.9 530.5 532.6 536.3 828.7 834.9 839.7 845.5 409.2 414.8 421.6 426.4 565.4 575.7 585.0 588.1 316.9 322.6 330.9 336.7 272.5 273.8 276.0 278.0 300.8 307.0 309.2 44.4 48.8 54.9 58.7 4.5 4,5 4.9 5.1 272.0 271.6 272.8 272.7 273.4 Mar. Apr. Weekly: 1973--Jan. Feb. Mar. Apr. May 248.6 3 10 17 24 31 1,959 1,898 3,245 1,791 2,158 29,886 31,007 31,720 30,537 30,576 29,367 29,241 29,915 28,958 29,548 258.2 254.6 255.7 255.0 254.3 200.8 197.4 198.7 198.0 197.6 530.2 526.2 528.5 527.8 527.7 409.8 315.5 315.6 316.7 317.3 318.9 7 14 21 28 1,608 31,568 31,945 31,476 30,284 29,511 29,767 29,530 29,167 29,111 29,671 29,235 256.3 2564 258.3 255.9 198.9 199.0 200.6 198.6 529.0 530. 532.3 530.3 411.3 413.0 417.5 417.2 320.1 322.2 323.2 325,0 272.8 274.0 274.1 274.4 7 14 21 28 32,305 1,718 32,006 1,699 30,238 29,148 28,679 29,350 29,850 29,296 29,676 29,451 257.6 256.1 257.5 256.0 199.8 198.3 199.5 198.1 533.0 531.7 533.7 532.8 418.8 419.9 423.2 423.6 327.5 330,1 331.4 333.2 275.3 275.6 276.2 276.8 4 11 18 25 p 32,628 31,838 32.519 2,456 30,579 29,319 29,219 30,897 30,128 29,366 29,831 30,097 257.5 257.5 258.9 257.0 199.3 198.9 200.2 198.1 534.1 534.1 537.9 535. 6 426.0 424.1 425.8 426.8 334.3 335.6 337.1 337.5 276.6 276.6 279.0 278.7 2,371 30,412 30, 259.5 200.9 538,5 429.5 338.3 279.0 2 p 102 ... .... ... . .. p - ..... :::::::::::::::::::: 3.6 3.7 4.4 4.1 4.6 4.7 4.7 ilil ............. 4.5 !i! .................. 4.4 ....................... : 4.4 4.7 4.8 ...................... i 5.0 ::::::: ............ 4.9 ............. !ii:ii: 5.0 i::! '. ............ 4.9 4.9 5.2 : :': t ; t:' t:;': .......... NOTE: 412.0 407.4 409.4 409.1 394.4 U.S. Gov't. Demand ....... ... on bank-related commercial paper are included beginning Reserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements bank-related commercial paper, and Euro-dollar requirements, reserve to subject deposits bank member total mainly includes October 1, 1970. Adjusted credit proxy daily averages except for nonbank commercial paper figures which are data Monthly weeks. statement for averages daily are data Weekly banks. borrowings of U.S. total loans and investments and thrift institution deposits. Weekly data are not available for M3 , are for last day of month. Preliminary. 

Federal Reserve (1973, May 14). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19730515

@misc{wtfs_bluebook_19730515,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1973},
  month = {May},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19730515},
  note = {Retrieved via When the Fed Speaks corpus}
}