Bluebook

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Content last modified 6/05/2009. (CONFIDENTIAL FR) June 15, 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 CONFIDENTIAL June 15, (FR) 1973 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Since the last meeting of the Committee, money supply measures have grown at annual rates well above the upper limits of the Committee's May-June ranges of tolerance, and RPD appears to be at the upper end of its range. The overshoot is particularly large for M 1 , as the table shows. Growth of Monetary Aggregates and RPD in May-June Target Period Ranges of Tolerance Latest Estimates Reserve and Monetary Aggregates (Growth at SAAR in per cent) RPD 9- 11 11 M1 4 - 6 10 M2 5-1/--7-1/2 Memo: Federal funds rate range (Per cent per annum) As adopted and subsequently amended 9-1/2 Statement week ave. 7-1/4--8-1/2 6/6 6/13 (2) In May alone, M1 grew at an annual rate of 11.2 per cent, while M2 rose at a 9.8 per cent rate. June. 8.43 8.17 Strength in M 1 continued into early Some of the unanticipated acceleration of M1 growth in May and -2early June may be attributable to the unusually large volume of personal income tax refunds. At the time of the last Committee meeting tax refunds in May were projected to exceed those of a year ago by about $1.5 billion. Nearly complete data now available indicate that the excess was closer to $3.5 billion. While total refunds for the fiscal year--at $22 billion--are only about $1 billion larger than projected at the time of the last meeting, the issuance of final refund checks was largely completed in May instead of spilling over into June to the extent we expected. (3) With the aggregates exceeding their ranges of tolerance by increasing margins as the inter-meeting period progressed, the Committee agreed to raise the ceiling on the federal funds rate. An initial adjustment from 7-7/8 per cent to 8-1/4 per cent was made on May 24 and another increase to 8-1/2 per cent was approved on June 8. Desk operations most recently have been geared to a reserve strategy expected to result in a funds rate around 8-1/2 per cent. Member bank borrowings generally averaged $1.7 billion in the four statement weeks since the last Committee meeting, though bulging to $2.4 billion in the holiday week of May 30. (4) Tightening of the money market was accompanied by substantial upward adjustments in short-term interest rates, raised to 6-1/2 per cent in early June. advances--of 100 basis points--occurred 90-180 day bank CD's, other short-term rates. and the discount rate was In short-term markets, the largest in rates on 3-month Treasury bills and both of which had been depressed earlier relative to Other short-term market rates were increased by 50-75 basis points, and the prime rate at major banks was increased by 50 basis points to 7-1/2 per cent. Virtually all of these increases had -3taken place before the 1/2 percentage point increase in Reserve Bank discount rates on June 8. Market reaction to the discount rate advance was limited because market participants were expecting some early Administration action on price controls. When the temporary price freeze and other measure were finally announced on June 13, the initial interest rate response was slightly upward. (5) In long-term markets, rate responses to the further tightening of money market conditions were quite moderate. Yield advances on long-term securities ranged generally from 5 to 15 basis points. Published series on mortgage rates also showed advances within this same range, and there were reports from some areas of somewhat larger increases in offering rates on new mortgages. (6) Growth in the bank credit proxy during the May-June target period appears to have been somewhat slower than in earlier months and little different from what was expected at the time of the last Committee meeting. Business loan demand has remained strong. issuance of large CD's dropped off markedly in June. However, bank net The new marginal reserve requirement became applicable to such deposits outstanding in the week beginning June 7. (7) The table on the following page shows (in percentage annual rates of change) selected monetary and financial flows over various time periods. Past 3 Calendar Years Dec. '72 Past 12 Months May '73 Past 6 Months May '73 Past 3 Months May '73 Past Month May '73 over over over over over Dec. '69 May '72 Nov. '72 Feb. '72 Total reserves 8.4 8.5 8.8 10.1 Nonborrowed reserves 8.8 2.1 -1.0 5.5 1.3 Reserves available to support private nonbank deposits 9.0 10.1 9.1 11.0 9.6 7.5 6.9 6.3 6.1 11.3 9.1 8.0 7,6 9.8 M3 (M plus deposits at thrift institutions) 12.8 10.9 9.4 8.1 8.8 10.7 12.4 14.2 15.1 12.1 Loans and investments of commercial ban'1s 2/ 12.4 15.7 17.3 16.1 22.6 2.1 3.4 4.3 3.0 Apr. '73 4.6 Concepts of Money M 1 (currency plus demand deposits)l/ M2 (MH plus time deposits at commercial banks other than large CD's) 11.2 Bank Credit Total member ban: deposits (bank credit -proxy adj.) Short-term market paper (Monthly ave. change in billions) Large CD's Nonban' paper .9 3/ commercial 0.0 4/ 3/ 0.0- -0.1 .1/ -0.9- 4 -0.6- I/ Other than interbank and U S Government Includes loans sold to affiliates and branches. 2/ Based on month-end figures 31 Less than $50 million 4/ Latest data April, 1973 NOTE: All items are based on averages of daily figures, except for data on total loans and investments of commercial banks, commercial pape r and thrift institutions--vhich are either end-of-month or last-Wednesday-of-month figures. Prospective developments The alternatives suggested for Committee consideration have (8) been framed to be consistent with those to be discussed in the chart show on Monday. The chart on the following page shows movements in M1, which is taken to index a collection of aggregates. It traces the actual growth from September 1972 to June 1973 (with the June figure partly a projection)and shows alternative growth rates for the June-December period. The slope of the middle dashed line represents continuation of the 5-1/4 per cent long-term growth path adopted by the Committee at its March meeting and reaffirmed in April and May. The steeper dashed line reflects a more rapid growth rate for M1 of 6-1/2 per cent and the flatter dashed line a less rapid rate of 4 per cent. (9) The three alternative dashed lines take as a base, or starting point, the average level of M1 in June that would be consistent with the mid-point of the 5--5-1/2 per cent growth rate adopted by the Committee in March (which in turn starts from the March level then expected). Because of the recent rapid growth in M1, the actual level of M1 expected for June (the circled point on the chart) is $1.2 billion in excess of the level consistent with the previously adopted 5-1/4 per cent path. Accordingly, a Committee decision to adhere to that longer-term growth path would require a correction in the rate of expansion over the period ahead. If the correction were to be completed within the next two quarters, growth from the indicated June level to December would have to be at a 4-1/2 per cent rate (alternative B). Similarly, as a result of the recent overshoot, a Committee decision to move onto a higher 6-1/2 per cent long-run target growth path (alternative A) or THE MONEY SUPPLY AND LONGER RUN TARGET PATHS RATIO SCALE, BILLIONS OF DOLLARS -1270 6%% GROWTH ALT. A a. - 51/4%% GROWTH ALT. B 4% GROWTH Ml LEVEL FOR MARCH EXPECTED AT 3/19 FOMC-..,-- 260 ALT. C -1250 I S I III N O 1972 SII I D J I II F M I A M I I 1 J J 1973 I A I S O N D -6onto a lower 4 per cent path (alternative C) would imply growth from the indicated June level to December at rates somewhat slower than those path rates. (10) The combined third and fourth quarter rates of growth required to hit the longer-run targets specified for M1 amount to 5-1/2 per cent for alternative A; 4-1/2 per cent for alternative B; and 3 per cent for alternative C. that is These are the rates of growth which would attain a December level on the desired long-run growth path after correcting for the recent overshoot. If the June level of M1 turns out to be lower or higher than presently projected, the growth rates to reach the desired path level of M 1 in December would, of course, be revised commensurately. Targets for the other monetary aggregates consistent with those for M1, and associated short-run ranges of tolerance for June-July, are summarized in the table below. (More detailed figures are shown in the table on page 6a. Alt. A Alt. B 6-1/2 5-1/4 4 M1 5-1/2 4-1/2 3 M2 7 Alt. C Longer-run path (indexed by M1 growth rate) Targets (3rd and 4th Qtrs. combined)* Credit proxy 5 9-1/2 8-3/4 RPD 10--12 9-1/2--11-1/2 M1 6-1/2--811/2 3-1/4 7-1/4 Associated ranges for June-July 6--8 9-1/4--11-1/4 5-1/2--7-1/2 Federal funds rate range 6-3/4--8-3/4 7-1/2--9-1/2 8-1/4--10-1/4 (inter-meeting period) *Assumes June levels for M1, M 2 and the credit proxy as shown in the table on page 6a. Also assumes no increase in Regulation Q ceilings. -6a- Alternative Longer-Run Targets for Key Monetary Aggregates M1 Adjusted.Credit Alt. A Alt. B Alt. C May June July 260. 6 262.6 263.8 260.6 262.5 263.6 260. 6 262.5 263.5 540.6 544.7 547.6 540.6 544.7 547.0 Sept. 265.6 265.0 264.6 553.4 Oct. 269.8 268.3 266.5 563.8 Alt. A Proxy Alt, A Alt. 8 Alt. C 540.6 544.6 546.6 430.5 433.9 435.4 430.5 433.9 435.0 430.5 434.8 551.1 549.2 445.2 444.3 443.5 558.4 553.6 454.3 453.0 449.6 Alt. B Alt. C 1973 433.8 Rates of Growth Quarters: 1973 2nd Q. 3rd Q. 4th Q. Months: June July 1973 9.5 4.5 6.5 9.0 4.0 5.0 9.0 3.0 3.0 9.0 6.5 7.5 9.0 4.5 5.5 9.0 9.0 5.0 8.5 4.5 9.0 6.5 9.0 5.0 9.0 4.5 Sept. Total Reserves Alt. A Alt. Alt. C 32,449 32,449 32,449 32,358 32,358 32,358 32,770 32,760 32,794 33,197 31,176 33,137 Oct. 34,255 May June July 34,187 33,891 3.5 3.0 11.5 10.5 8.25 11.5 9.5 7.75 11.5 9.0 5.5 9.5 4.0 9.5 3.0 9.0 3.0 RPb Alt. A 30, 100 30,413 30,656 31,224 30,100 30,413 30,632 Alt. C 30,100 30,413 30,622 31,202 31,164 31,986 31,920 31,630 10.5 10, 5 10.6 10.5 10.5 9.0 10.5 10. 6 6.6 12.5 9.5 12.5 8.75 12. 5 Rates of Growth Quarters: Months: June Ju ly 1973 2nd Q. 3rd Q. 4th Q. 4.5 10.5 12.5 4.5 10.0 12.0 -3.5 16.6 -3.5 15.5 4.5 9.5 9.6 -3.5 15.0 8.25 (11) In the weeks immediately ahead, a Federal funds rate in the general neighborhood of the currently prevailing 8-1/2 per cent rate may be consistent with the specifications for the aggregates shown below for alternative B. Under B, M 1 in June-July is indicated to rise in annual rate, range a 6--8 per cent with growth at a 9 per cent rate in June, but slowing to about a 5 per cent rate in July. The slowing in July and the quite modest rate of growth indicated for the third quarter in part reflect the unwinding of the presumably temporary surge in privately held cash balances engendered by the heavy income tax refunds. More basically, the longer-run demand for M 1 is likely to be well below the second-quarter pace in lagged reaction to the sharp recent rise in short-term interest rates and in reflection of the more moderate rate of growth in nominal GNP projected for the second half of 1973. (12) The high degree of economic uncertainty now prevailing, including the Administration's recently announced price freeze, make projections of money demand more than usually difficult. While prices will stablilize during the period of the freeze, the makeup of the phase IV program and its implications for longer-term price movements are total unknowns. The money supply paths presented in this blue book do not assume an appreciable longer-run reduction in demand for money as a result of the freeze and Phase IV. Nor have we made an explicit allowance in the short- run for any temporary downward shift in transactions demand for money, such as conceivably could result from a temporary stabilization of prices, or from shifts into market securities if expectations of declining interest Because of these various uncertainties, and rates become more prevalent. their possible effects on the demand for money and hence on RPD, the Federal funds rate ranges suggested are wider than in recent meetings (for example, 7-1/2--9-1/2 per cent for alternative B). However, the Committee may wish to allow for the possibility that the freeze itself may lead to a temporary lessening of money demand, by permitting growth rates below the ranges specified or by lifting the lower end of the funds rate range. (13) Even with a continuation of current money market conditions, short- and long-term interest rates over the next few weeks may be under some further upward pressure. Short rates do not appear to have adjusted fully to the higher day-to-day rates now prevailing, and the yield spread between short- and long-term markets is abnormally small and in some cases negative. Interest rates would, of course, come under greater upward pressure if money market conditions should tighten, as they might under either alternative B or C. However, market expectations concerning the likely content and effectiveness of Phase IV will be critical for interest rate behavior. (14) In view of the recent upsurge in short-term interest rates, growth in time deposits other than large CD's is expected to slow in the second half of the year to around a 5--6 per cent rate under alternative B. This does not allow for any increase in existing Regulation Q ceilings; if ceilings were raised across the board by one-half per cent, as is assumed in the analysis to be presented in Monday's chart show, growth rates would average about 2 percentage points higher. A sharper slowing in time deposit inflows, is contemplated under alternative C and less of a slowing under alternative A. (15) Bank credit demands are expected to remain generally strong. Should expectations of rising interest rates strengthen, though, some corporate borrowers might shift out of banks into the capital market. In any case, reduced inflows of both private demand and consumer-type time deposits suggest that banks are likely to remain aggressive bidders for CD's. But CD growth will probably be slower than in the first few months of the year in reflection of the higher cost of CD's. On balance, taking all deposit flows into account, growth in the bank credit proxy is expected to slow further in the second half of the year under all three alternatives, with the slowing greatest under alternative C. -10Proposed directive (16) 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. For all three alternatives it is proposed to delete the reference to international developments because the speculative pressures in exchange markets since shortly before the last meeting have not caused special operating problems for the Desk. Retention of the reference to domestic financial market developments is proposed in both alternatives B and C, because both involve the possibility of a significant tightening of the money market. As will be noted, both alternatives B and C refer to the aggregate growth rates "indicated for the first half of the year." current estimates for June, these are as follows: M1, 5.5 per cent; M2, 7.5 per cent; and the bank credit proxy, 13.5 per cent. Alternative A To implement this policy, [DEL: of account taking while international developments,] market financial domestic and the Committee seeks to achieve bank reserve and money market conditions consistent with MODERATE [DEL: somewhat slower] growth in monetary aggregates over the months immediately aheadthan [DEL: months]. 6 past the in average on occurred Including -11Alternative B To implement this policy, while taking account of [DEL: and] international domestic financial market developments, the Committee seeks to achieve bank reserve and money market conditions consistent with somewhat slower growth in monetary aggregates over the months immediately ahead than [DEL: occurred months] 6 past the in average on APPEARS INDICATED FOR THE FIRST HALF OF THE YEAR. Alternative C To implement this policy, while taking account of and] international [DEL: domestic financial market developments, the Committee seeks to achieve bank reserve and money market con[DEL: slower growth in monetary ditions consistent with somewhat] on [DEL: aggregates over the months immediately ahead than occurred 6months] past the in average HALF OF THE YEAR. APPEARS INDICATED FOR THE FIRST STRICTLY CONFIDENTIAL (FR) 6/15/73 CHART 1 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS -;134 11% growth for -30 32 -29 30 5 I I M A -28 5<f I I II M J 1972 S D M J 1973 S Y I1 M 1973 D f * Break in Series Actual Level o RPD After ReprodLction in Reserve Requirements Effective November 9, 3972 J J CHART 2 STRICTLY CONFIDENTIAL(FR) 6/15/73 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS -270 250 li ll i l i I I II I1 230 I i 1 I 1: " 3ROADER MONEY SUPPLY M2 600oo -580 -560 -540 520 -500 480 ' ; ' j I; I; ' SI ' " ' I' ~ 1972 I 1973 ' 1A '~' D J 1972 F M A 1973 M J CHART 3 STRICTLY CONFIDENTIAL (FR) 6/15/73 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 46/13I73) - TOTAL RESERVES 1972 *Xreakmi sein es 1973 J f M A M 1973 Act-ual Level of Total Reserves Aer Reductio n m Reserve Requirements Effective Novenber 9 1972 J J CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES NDITIONS INTEREST RATES Short-term INTEREST RATES Long-term TABLE 1 STRICTLY CONFIDENTIAL --------------------- JUNE BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) ---------------------------------- ft----------------------------w-I I AGGREGATE RESERVES I I I RESERVES AVAILABLE FOR PRIVATE NONRANK DEPOSITS 1 --- I--------------------- ------I I SEAS ADJ 1 NON SEAS AOJ II PERIOD - - - - --i - - lii - - - MONTHLY LEVELS-SMILLIONSI ----------------------I 1973--JAN. I FEB. 1 MAR. ) APR. I MAY I JUNE I - - S (1) - - I - (2) QUARTERLYI I 1973--1ST OTR. 2ND OTR. MONTHLY 1973--JAN. FEB. MAR. APR. MAY JUNE I 1 I I I I I I 1 22.4 -4.7 13.4 9.6 9.6 12.5) I 11.01 I MAY-JUNE 10.6 10.5 10.5) I MAR. 7 14 21 28 I I I I 4 11 18 25 I I I I 2 9 16 23 30 I I 1 3012 29*366 29*831 30045 6 13 I 1 - - - (1) I 11 II II II II It II II II II II 32.242 31.649 31,999 32.326 32.449 (32*3581 30 .848 29 1.787 29 .526 30 1.167 30 .199 (30.760) II II II II II 29107 26.952 - I I 30*120 29.620 30*360 30.053 30.307 1 35.8 -22.1 13.3 12.3 4.6 ( -3.5) 29.972 29i136 29.939 30.192 30.408 29*805 30.242 29.669 29.898 29.904 29.597 I 0.5) II - CD'S AND NON DEP OTHER TIME DEP - (5) 1 11 11 II f II it 11 fI II fI Ift 11 II It 192468 19.031 19.021 18.870 18.967 (19096) .- . - (6) GOV'T AND INTERBANK - (7) (8) 8.3 ( 26,1 1.3 I ( 22.5) 12.0) 2.9 1.5) ( 23.2 -13.5 -0.6 -9.5 6.2 ( 8.0 '41.3 2.253 2.384 2.669 2.970 3.119 ( 3.224) 2.832 293S3 2*353 2.377 2,465 29349 ( 1.946) ( 7.0) ( 11.4 23.1 7.7 10,0) 90.2 83.0) 13.5 4.4 5.2 10.9 10.0 95) 9( 41.3 69.8 143.5 135.3 60.2 40.5) 10.0) 51.5) I 19,243 186953 19,033 18857 7,606 7,693 7,723 7.713 2S524 2*603 2,671 2.799 2.455 2,422 2,331 2,248 19,012 180767 18.909 18.781 7,742 2.850 2.910 2.982 3.055 2,501 2,689 29 0985S 30 2.582 18971 18,846 199072 18,880 19.068 7,868 7?837 7,849 7,818 7,850 3,011 3,050 3,076 3,166 3.201 2,267 2,494 2,*80 2,343 2,056 30 2.970 29 .*14 l 189968 18981 7.*871 7,883 3,229 3,244 1,963 1768 30 .148 29 319699 9.679 28 1.30 29 32.628 31.838 32,519 32,402 30 1O319 29 29 .219 843 30 32.387 32,114 32.940 32.396 32.364 301,427 29 .1,620 291.490 32.443 31.845 7.646 7.674 7.707 7?77 7.842 ( 7.904) I -7 ITIO) .238 32.305 31,718 32,006 II I 309481 30.078 I 4.8 II II II I I PRIVATE DEMAND 14.2 1 I I JUNE - (3) 4.5) I I MAY - II 8.8 I 29.850 29*296 29.676 29451 I APR. f I I WEEKLY LEVELS-SMILLIONS ---------------------- ... ----------. m------SEASONALLY ADJUSTED ------------------- NONBORROWED I RESERVES I I 1.79 I I -. REQUIRED RESERVES I 30.384 29.369 29.360 299893 29.936 (30076) ***---------------** *- -- -I ------------------ t------- TOTAL RESERVES I 29.11 29.296 29*622 29.860 30.100 (30*413) ANNUAL RATES OF CHANGE 1972--4TH QTR. &#45;&#45;&#45; ------------- 11-.----II 15, 1973 7.769 7,758 7.761 I NOTEt DATA Sw6WN IN PARENTHESES aRE CURRENT PROJECTIONS. 1/ AT THE FOMC MEETING MAY 15. 1973 TAM COMMITTEE AGREED ON A RPO RANGE OF 9 TO 11 PER CENT. 2.397 STRICTLY CONFIDENTIAL MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED) JUNE 15, 1973 -------------------------------------.......... I-------....-. I MONEY SUPPLY I ADJUSTED II U.S. I TIME AND SAVINGS DEPOSITS I CREDIT II GovT. I I OTHER I NARROW I BROAD I I (M) I (M2) PROXY II DEPOSITS I TOTAL I THAN CODS I CD S --------------------------------------- m .............. I (2) (1) (6) I (7) (3) II (4) I (5) ----------------------------- PERIOD ---------- MONTHLY LEVELS-SBILLIONSI ---------------------I 1973--JAN. FEB. MAR. APR. MAY JUNE PERCENT TABLE 2 ANNUAL GROWTH I OUARTERLY --------1972--4TH OTR I 6--------I NONOEPOSIT I SOURCES OF I FUNDS II II 256.7 256.6 25862 260.6 (262.5) I I I 527.9 530.5 532.6 5362 540.6 409.2 414.8 421.6 426.2 430.5 (433.9) 1 I I (544.7) II I II 11 11 7.1 7.2 7.5 5.8 4.6 4.6) I I I I 1 316.9 322.6 330.9 336*7 341.8 (344.3) 272.5 273.8 276.0 278.0 280.1 (282 1) 44.4 I 1 1 48.6 54.9 58.7 61.7 (62.2) I 1 I I I 4.5 4 5 4o9 5.1 5.4 ( 56) I I 4.8 5.0 4.9 5.0 .6 11.6 12.1 I II 1973--1ST TR,. 2ND OT. I MONTHLY ------1973--JAN. FEB. MAR. APR. MAY JUNE I I I 1.7 I 1 9.0)1 15.0 -0.5 1 6.1 -0.5 7.5 I I 11.2 ( 9.0) I .9 I 10.2 5.7 6I 1 4 7 16.4 II S 1I 19.7 II 13.1 1I 1 I I (16.0) 8I -I 9.5 9.0) II 9.6 8.1 9*8 S9.0) 12.1 (9.51 ) 11 I If 15.7 21.6 30.9 21.0 12 ( 9.0) 12.9 S.7 I 1 9.6 I. I .1 S9.0)1 II MAY-JUNE I WEEKLY LEVELS-SBILLIONS I ----------------------- 9 MAR. 7 14 21 28 (10.0) (11.0) ( 9.5) 257.6 256.1 257.5 56.0 533.0 531.7 533.7 5328 I I 418.8 419.9 II II II II If 423.2 II 423.6 II S (13.) 7.0 6.3 8.1 8.2 I 1 I 1 327.5 330.1 331.4 333.2 7.7 S.4 4.6 6.0 1 334.3 335.6 337.1 337.4 6.8 5.4 4.1 3.8 3.9 1 275. 275.3 2.2 54.s 276. 276. 5.2 56.3 57.7 I I 9.0 II 4 APR. 257.5 257.5 259.9 257.0 11 25 1 I 1 534.1 534*1 537.9 535.6 426.0 I I I If 424.1 II 425. 426.7 11 I1 1 I 276. 279.0) I I.1 I 278.6 56.8 I 279.9 280.7 281.0 I II 59.3 61.1 61.8 62.3 62.6 I I 281.5 281.8 1 4.9 4.9 5.2 5.4 II MAY 2 9 16 23 30 PI JUNE ----_ I ___----------------- 6 P 13 PEI I 259.4 259.5 261.2 260.6 I 260.8 I 263.0 263.0 1 I 538.4 538.3 541.2 541.2 5418 .8 544.5 544.8 I I I I I 429.5 11 428.4 If 430.2 430.8 431.0 II 11 it 433.3 433.3 I I it t------f ------ t------f 4.7 4.4 I I 1 I 1. 338.2 340.0 341* 342.9 343.5 342.* 343.7 371 ........ 27 I 5.2 5.0 5.4 1.7 So? S.7 61.3 61.9 5.5 5.6 1 t------------------ f .... P - PRELIMINARY PE - PARTIALLY BSTIMATED ANNUAL RATES OF CHANGE OTHER THAN THOSE FOR THE PAST ARE ROUNDED TO THE NEAREST HALF PERCENT. NOTEI CATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. STRICTLY CONFIDENTIAL (FR) JUNE 15, 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 Overationis Agency RP's3, Coupon Issues Net Issues (3) (4) (2) _I/ Total (5) ' Daily Average Reserve Effect. 27 A Member Other 4/ Open Market Factors Bank Borrowing Operations (8) (7) (6) in reserve categories available res. 5/ req. res. against (6)(7)+(8)-(9) U.S.G. and interb. (10) (9) available reser (11) Monthly 1977 -- Doc. 450 1973 -- Jan. 1,336 -- Feb. Mar. Apr. ay June 659 1,109 1,332 -506 196 -207 -- -135 134 147 596 -25 443 -839 -78 -343 862 2,197 1,116 117 376 278 1,331 995 -193 542 -414 -942 644 1,636 1,106 -1,470 146 1,689 1,323 1,439 428 265 -137 66 -1,794 -1,723 -884 -1,394 -109 156 -74 44 -1,111 75 376 67 -1,140 - 46 565 260 175 -- -1,212 -769 998 -259 209 292 656 -8 &#45;&#45;&#45; -379 2,385 -2,020 -144 2,694 -1,612 -572 743 266 -252 343 -199 -36 -221 -293 -24 62 -479 -836 803 253 467 229 -590 -110 -- -18 -14 -19 -21 July Weekly 1973 -- Apr. May 4 443 -- 11 18 25 243 309 201 --267 2 472 -- -16 646 1,102 9 16 23 409 -211 ---- ---- -41 877 45 368 877 255 400 535 8 2 4 p -391 330 -126p 30 -205 -- -16 -2,617 -2,838 -1,356p 71 p June 6 13 70 27 -1,107 - 198 - -- -- -19 1,955 848 -140p -3,195 -3,412 -2,15 p 6 2 7 6 345 280 6 -7 p -267 -148 -1,005 67 5 p - 3 p 815p 33p 1,527p 6 -30 p - 67p -289p 216 -603 437 -573p 229p 6p -307p SRpresents 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. 4/ Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, and other FR accounts. 5/ Reserves to support private nonbank deposits. Target change for May and June reflects the target adopted at the May 15, 1973 FOM( lmeting. Target change for previous tnths reflects the bluebook patterns that are consistent with target ranges that were adopted during the Month. 7/ -306 STRICTLY CONFIDENTIAL (FR) June 15, Table 1973 4 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of Dollars U. S. Govt. Security Dealer Positions Coupon Issues Bills Bills...... period Other Security Dealer Positions Municipal Corporate Bonds Bonds ank Reserves Positions Meber Excess Reserves Borrowings at FIB Total Seasonal Basic Reserve Jeficit 8 New York 38 Other (1) (2) (3) (4) 1972 -- High Low 4,291 1,916 1,585 -93 235 0 383 40 796 -133 1,223 12 -5,635 -1,638 -5,720 -1,910 1973 -- igh Lo6 3,718 1,586 1,125 -96 175 0 244 55 560 -86 2,400 688 -5,243 -1,831 -7,093 -4,839 1972 -- May 2,792 675 123 134 106 119 -2,625 -2,652 June 2,694 205 87 260 206 94 -2,828 -2,864 July Aug. Sept. 2,262 2.643 4,099 97 692 170 142 114 53 166 176 174 147 255 162 202 438 514 -2,95 -3,913 -3,835 -2,603 -2,801 -4,024 Oct. N6v. Dec. 2,887 3,096 3,510 207 1,039 953 105 84 58 132 191 291 247 314 219 574 606 1,049 -3,637 -4,561 -4,977 -4,044 -3,622 -4,958 1973 -- Jan. Feb. Mar. 3,407 2,132 2,490 720 562 -50 27 77 24 177 123 125 342 205 295 1,165 1,593 1,858 -4,550 -4,187 -4,273 -5,469 -5,436 -5,847 Apr. May 2,457 *1,894 106 *421 12 66 60 151 152 113p 5 30p -3,293 -3,019 -6,577 -5,872 3,142 2,549 2,677 2,222 72 190 104 12 4 0 0 45 55 56 105 76 537 -86 234 336 1,646 9 -3,577 -4,227 -4,121 -2,392 -5,933 -7,093 -6,676 -6,908 2 9 16 23 30 1,969 1,788 1,709 *1,586 *2,375 221 809 562 * 104 * 269 61 0 44 6 154 72 162 126 143 100 233 -81 363 140p 180p 1,875 1,484 1,814 1,688 p 2,400p 16 18 23 32 p 47p -1,831 -3,275 -3,658 -2,767 -2,749 -5,401 -5,509 -5,829 -5,863 -6,437 June 6 13 20 27 *2,608 *2,686 * 462 * 551 25 115p 54 100p 350p - 17p 1,664p 1,697 p 6 -3,004 p -4,274p -5,875p -6,8 98 p 1971 -- Apr. 4 11 18 25 may Nlt 1c (5) (6) (7) 1,721 1,787p 1,754 1,502 1,865 4p 67p (8) (9) Tradin oasitinns which exclude Treasury bills financed by repurchase agreetral 4n, nmtArnn are nn a rnmmiiment hasis. tl1r^; .. ,d.l.,r;. ,*.. Other security dealer positions are debt ments maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-teil. Issues still in syndicate, excluding trading positions. eral funds purchases. The basic reserve Weekly data are daily averages for statement weeks, figures. * STRICTLY COlFFIDENTTAL deficit is excess reserves less borrowing at Federal Reserve less net Fed- except for corporate and municipal issues it syndicate which are Friday CONFIDENTIAL (FR) JUNE Table 15, 1973 5 SELECTED INTEREST RATES Per Cent Short-term ederal Funds eriod Treasury bills 90-day 1-year (1) (2) (3) 90-119 day Commercial ----a (4) Lon -term CD's New issue-NYC 60-89 day 90-119 day -aue (5) (6) Aaa Utility New Recently Offered (7) (8) l a Buyer (9) nic U.S. Government (10-yr. Constant maurity rBond (10) FNMA Auction Yd (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 -- igh Low 8.43 5.61 7.09 5.15 6.95 5.42 7.88 5.63 7.88 5.38 8.00 5.j0 7.64 7.29 7.60 7.26 5.35 5.00 6.94 6.42 8.04 7.69 1972 -- My Juune 4.27 4.46 3.69 3.91 4.46 4.71 4.45 4.60 4.15 4.38 4.33 4.50 7.38 7.32 7.38 7.36 5.31 5.34 6.13 6.11 7.63 7.63 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 4.63 4.65 4.88 4.75 4.78 5.00 7.38 7.37 7.40 7.37 7.34 7.42 5.41 5.30 5.36 6.11 6.21 6.55 7.63 7.63 7.65 Oct. N v. Dec. 5.04 5.06 5.33 4.74 4.78 5.07 5.39 5.26 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 Jah. Feb. Iar. 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 7.46 7.35 7.41 7.51 5.05 5.13 5.29 6.46 6.64 6.71 7.69 7.72 7.78 Apr. May 7.12 7.84 6.26 6.36 6.51 6.63 7.13 7.26 7.04 7.44 6.75 7.41 7.48 7.48 5.15 5.15 6.67 6.85 7.89 7.96 1973 -- 1971 -- pr. 4 7.18 6.44 6.71 7.08 7.13 6.75 7.51 7.43 5.22 6.70 7.86 11 18 25 6.84 7.23 7.14 6.26 6.18 6.22 6.43 6.41 6.57 7.13 7.13 7.13 7.00 7.00 7.05 6.75 6.75 6.75 --7.45 7.47 7.52 7.42 5.07 5.17 5.14 6.64 6.64 6.68 -7.89 2 9 16 23 7.43 7.60 7.81 8.06 6.24 6.10 6.15 6.44 6.57 6.52 6.47 6.68 7.13 7.13 7.18 7.33 7.25 7.25 7.25 7.38 6.75 6.75 6.75 7.50 7.40 -7.45 7.61 7.42 7.45 7.50 7.55 5.10 5.10 5.14 5.20 6.75 6.81 6.85 6.91 7.92 30 7.95 6.74 6.86 7.44 7.38 8.43 8.17 7.03 7.09 6.95 6.93 7.68 7.88 7.75 7.88 7.50 7.88 8.00 7.55 7.63 7.58 7.60 7.59 7.60 5.22 5.13 5.13 6.94 6.92 6.86p 8.00 June 6 13 May 7.96 8.04 20 27 Notes: Weekly data for columns I 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 i 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 statement week. The FNMA auction yield is the yield in the bi-weekly auction for short-term forward commitments for Government underwritten mortgages. Appendix Table I CONFIDENTIAL (FR) RESERVES AND MONETARYVARIABLES Reserves Period Money Stock Measures Available toI Support Pvt. Depost (3) Total Nonhorroaed (1) 1 (2) 1 () 2 (5) 3 (6) Bank Credit Measures Adjusted Totel Credit Loans and Prox Investments (7) (8) June 15, 1973 Total Time (9) Time Other than CDs 10) Other Thrift Institution Deosits 11 (Per Cent Annual Rates of Growth) CD's (12 Nondeposit Funds (13) U.S. Gov't. Demd (14) (Dollar Change in Billions) I Annually!: 1968 1969 1970 1971 1972 +7.5 -1.1 +6.1 +7.2 +10.6 +5.3 -2.8 +9.6 +8.1 +7.1 +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 +13.0 +9.5 +0.4 +8.2 +9.4 +11.6 +11.0 +3.9 +8.1 +11.3 +14.6 +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 -0.6 +0.5 +1.1 -0.3 +0.4 Semi-Annually: 1st Half 1971 2nd Half 1971 +9.7 +4.4 +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 -7.1 -0.4 -1.4 +1.1 1st Half 1972 2nd Half 1972 +11.7 +9.0 +12.1 +2.0 +8.6 +10.4 +7.7 +8.5 +10.8 +10.3 +13.0 +12.1 +11.4 +11.1 +12.8 +15.5 +15.4 +14.5 +13.7 +12.1 +17.3 +15.0 -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 +6.7 +9.8 +9.7 +11.1 +9.8 +16.6 +8.0 +15.9 +14.2 +13.3 -0.4 +1.1 +10.4 +12.6 +3.6 +14.2 +10.7 +13.1 -0.8 44.8 +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 +10.7 +12.4 +11.5 +11.0 +11.5 +9.8 +12.1 +15.7 +9.5 +13.9 +16.4 +15.& +14.8 +14.0 +14.4 +16.1 +10.8 +12.3 +11.6 +19.7 +14.3 +16.2 +13.2 -0.3 +0.4 +0.3 -0.4 +0.5 -1.1 +1.4 Quarterly3rd Qtr. 1971 4th Qtr. 1971 lot 2nd 3rd 4th Qtr. Qtr. Qtr. Qtr. 1972 1972 1972 1972 -7.1 +10.5 41.7 +5.7 + 8.6 +15.0 +18.4 +23.1 +9.5 +13.6 +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 +5.2 +7.6 -1.9 +18.2 +11.4 +12.5 +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 +10.5 +13.4 +14.2 +12.4 +19.9 +5.4 +20.0 +2.3 +9.0 +17.9 +14.4 +10.7 +21.2 +16.7 +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 +14.0 +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 -0.1 -0.3 +0.1 -0.2 +0.2 +0.2 -1.7 +1.1 +1.1 +0.7 -1.3 -1.0 -0.7 +0.6 +1.2 +0.6 -0.4 Jan. Feb. Nar. Apr. +35.8 -22.1 +13.3 +12.3 +31.3 -41.3 -10.5 +26.1 +22.8 -4.7 +13.4 + 9.6 -0.5 +6.1 -0.5 +7.5 +6.4 +5.9 +4.7 +8.1 +9.8 +9.0 +6.9 +8.4 +8.3 +16.4 +19.7 +13.1 +15.4 +20.3 +18.7 +6.4 +15.7 +21.6 +30.9 +21.0 +12.9 +5.7 +9.6 +8.7 +19.4 +9,1 +11.7 +6.6 +0.1 +0.4 +0.2 40.6 +0.1 *0.3 -1.7 +11.2 +9.8 +8.8 +12.1 +22.6 +18.2 +9.1 +8.0 +0.3 -1.2 lst Qtr. 1973 1972: 1973: +8.9 +10.5 May p +8.8 +4.6 +1.3 +9.6 Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, October 1, 1970. p - Preliminary. NOTE: +0.1 +0.3 -0.1 +0.2 +0.1 and requirements on bank-related commercial paper are included beginning Appendix Table II CONFIDENTIAL (FR) June 15, RESERVES AND MONETARYVARIABLES (Seasonally adjusted, billions of dollars) MONEYSTOCK MEASURES Total Available to NonSupport Pvt. __ I borrowed Deosits Total . - ,v... .. -C-. . . . t . (2) (3) (4) Pvt. Da. . (5) (6) (1 BANK CREDIT IEASRESR - Adjusted Credit Total Loans and Prn.v ITnveatmnta (8) (9) . . . 1973 OTHER Total Tlme . .. (10) Time Other than .. 1.. (11) Thrift Institution nenoatra (mD's 4.. 41-I (12) (13) NonDeposits Fundsrl .. Annually: Dec. 1969 Dec. 1970 nec. 1971 27,959 29,121 31,209 26,699 28,727 31,060 25,339 26,975 28,907 208.8 221.3 236.0 162.7 172.2 183.1 392.3 425.2 473.8 594.0 661.3 727.7 307.7 332.9 364.3 406.0 438.9 488.6 194.4 229.2 270.9 183.5 203.9 237.9 201.7 216.1 253.8 10.9 25.3 33.0 1972--,lan. Feb. Mar. 31,776 31,639 32,021 31,751 31,601 31,891 29,172 29,329 29,656 236.2 239.1 241.4 183.3 185.8 187.7 477.9 483.9 488,9 735.7 746.0 754,8 367.1 369.3 374.3 494.4 499.5 507.8 276.9 278.6 281.3 241.7 244.8 247.5 257.8 262.1 265.9 33.2 33.7 33.8 Apr. May June 32,612 32,852 33,027 32,467 32,720 32,938 29,824 29,920 30,144 243.0 243.8 245.1 189.1 189.6 190.7 492.1 495.5 499.3 761.5 767.9 775.0 378.1 383.0 385.1 510.1 518.6 519.8 284.3 288.6 291.7 249.1 251.8 254.2 269.4 272.4 275.7 35.2 36.8 37.5 July Aug. Sept. 33,171 33.381 33,327 33,018 33,038 32,870 30,317 30,562 30,890 247.7 248.6 250.1 193.1 193.8 194.8 504.5 508.4 512.1 784.0 791.6 799.0 388.3 391.4 394,5 523.7 521.5 537.9 295.0 298.9 301.9 256.8 259.8 262.0 279.6 283.2 286.9 38.3 39.1 39.8 Oct. 33,832 31,883 31,309 33,295 31,297 30,063 30,973 29,496 28,862 251.6 252.7 255.5 195.9 196.5 198.7 516,4 519.8 525.1 807.0 813.6 822.0 398.4 401.9 406.4 542.7 552.3 560.0 304.8 308.4 312.8 264.8 267.1 269.6 290.6 293.8 296.9 40.0 41.2 43.2 32.242 31,649 31,999 30,848 29,787 29,526 29,411 29,296 29,622 255.4 256.7 256.6 198.4 199.3 198.7 527.9 530,5 532.6 828.7 834.9 839.7 409.2 414.8 421.6 567.2 576.8 585.8 316.9 322.6 330.9 272.5 273.8 276.0 300.8 304.4 307.0 44.4 48.8 54.9 32,326 32,449 30,167 30,199 29,860 30,100 258.2 260.6 199.5 201.6 536.2 540.6 845.6 851.8 426.2 430.5 588.9 600.0 336.7 341.8 278.0 280.1 309.4 311.2 58.7 61.7 32,628 31,83 32,519 32.602 30,579 29,319 29,219 30,843 30,128 29,366 29,831 30,045 257.5 257.5 258.9 257.0 199.3 198.9 200.2 198.2 534.1 534.1 537.9 535.6 426.0 424.1 425.8 426.7 334.3 335.6 337.1 337.4 276.6 276.6 279.0 278.6 ::::::: :::: ::: 32,387 32,114 32,940 32,396 32,364 30,427 29,620 29,490 29,985 30,582 30,120 29,621 30,360 30,053 30,307 259.4, 259.5 261.2 260.6 260.8 200.8 200.2 202.3 201.6 201.8 538.4 538.3 541.2 541.2 541.8 429.5 428.4 430.2 430.8 431.0 338.2 340.0 341.7 342.9 343.5 279.0 278.8 279.9 280.7 281.0 32,403 30,970 30,481 263.0 203.7 544.5 433.3 342.8 281.5 Monthlv: NOv. Dec. 7 19 3--Jan. Feb. Mar. Apr. May Weekly: 1'<73--Apr. p 4 11 II 18 25 Mny 2 16 73 p 30 p June 6 p 57.7 59.0 58.1 .............. :... 58.8 ... :......:.......:... 59.3 ................... 61.1 61.8 ::: ::::: ::: 62.3 : :: . ::: ::: . 62.6 :: ::: ::::: ::: :: ::::: :: :: : : 61.3 1 __I-_____ LI _ __;;1 ........... ;;±.;;;...e * I .................... W I2p - Prel iminry beginning are included commercial paper on bank-related and requirements October 16, 1969, beginnig are included Euro-dollar borrowings Note: Reserve requirements on NnTE: Resere r Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial paper, and Euro-dollar 1,1970. nctnher 1. October Monthly data are daily averages except for non-bank commercial paper figures which Weekly data are daily averages for statement weeks. of U.S. banks. horrowingborrowings day of month. Weekly data are not available for M3 total loans and investments and thrift institution deposits. arp fOr 1;on last U.S. Gov't nemanrl D a--nd (15) 

Federal Reserve (1973, June 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19730619

@misc{wtfs_bluebook_19730619,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1973},
  month = {Jun},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19730619},
  note = {Retrieved via When the Fed Speaks corpus}
}