Bluebook

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Content last modified 6/05/2009. (CONFIDENTIAL FR) February 15, 1974 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM CONFIDENTIAL (FR) February 15, 1974 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) The money stock and reserve aggregates have shown a mixed performance relative to the Committee's ranges of tolerance during the January-February target period. For most of the period since the last meeting, M1 and RPD's appeared to be growing at rates well below the low ends of their ranges. However, a sharp rise of M1 in the first two weeks of February (with the second week based on preliminary and partly estimated data) brought the growth rate back within the range of tolerance, within its range for most of the period, as growth in M2 remained consumer-type time and savings deposits was strong, and moved slightly above the top of the range when the preliminary data for the second week of February became available. Growth of Monetary Aggregates and RPD's in January-February Target Period Reserve and Monetary Aggregates (Growth at SAAR in per cent) RPD's Latest Estimates Range of Tolerance 4-3/4--7-3/4 3.4 M1 3--6 4.0 M2 6--9 9.6 Memo: Fed funds rate (per cent per annum) Avg. for Statement week ending 8-3/4--10 Jan. 23 9.60 Feb. 13 8.93 (2) In January, M1 declined at a 3.1 per cent annual rate, instead of rising slightly as originally indicated. The sharp rise -2of M 1 in the first two weeks of February suggests a growth rate for the month Some part of this February increase in private balances of around 11 per cent. may be related to a very sharp and considerably greater than anticipated decline in U.S. Government deposits. (3) Growth of RPD's in the January-February period appears to be somewhat below the lower end of the Committee's range of tolerance. As shown in the table below, RPD's supporting private demand deposits are declining substantially--rather than rising slightly as expected--reflecting mainly the impact on required reserves, as lagged two weeks, of changes in the weekly pattern of demand deposit flows. Excess reserves also are running lower than expected, on average, thus reducing the need to supply reserves through open market operations. CD's and other time deposits have been absorbing more RPD's than anticipated. Comparison of Projected Changes in RPD's by Use January-February 1974 (In millions of dollars) Projections as of January 22, 1974 FOMC meeting Change in PD's 1/ Total RPD's 1/ Current Projection 44 -113 19 -162 Change in Category of Use: Private demand deposits Time deposits other than large CD's 120 CD's and nondeposit funds -38 52 Excess -57 -130 1/ 128 Change from December 1973 to February 1974 level consistent with midpoint of Committee's range of tolerance for RPD growth on basis of new estimates of deposit data. (4) Conditions have eased significantly in the Federal funds market since the last Committee meeting. The funds rate had averaged 9.60 per cent in the statement week of January 23 that encompassed the meeting. Shortly after the meeting, in light of the decision taken by the Committee, the Desk began supplying reserves at a pace consistent with a funds rate in a 9¼--9½ per cent range. Subsequent operations were conditioned by the Treasury financing then in process. Shortfalls in growth rates of M1 and RPD relative to the Committee's ranges of tolerance led to somewhat more active reserve supplying operations, and the funds rate averaged 8.93 per cent in the week ended February 13. The Desk is currently aiming at a reserve supply consistent with a funds rate of around 9 per cent. (5) As the funds market has eased in recent weeks, declines in other short-term rates have ranged around 100 basis points and the bank prime loan rate has dropped from 9¾ to 9 per cent at some banks. Reductions in market rates have occurred even though the volume of directly placed and dealer placed commercial paper coming to market was exceptionally heavy and a sizable amount of large CD's was marketed by commercial banks, given large business loan growth and a favorable market atmosphere. Despite the drop in short-term market rates, member bank borrowing at the Fed was maintained, averaging around $1.1 billion during the past four weeks, slightly higher than in the previous four weeks. (6) Yields in all sectors of the bond market have also been subject to downward pressure since the January FOMC meeting, notwithstanding a heavy volume of new corporate and municipal issues brought to market and fairly aggressive lengthening of maturities by the Treasury in its midFebruary refunding. These latest reductions in long-term rates offset a sizable part of the increases recorded in late December and early January. -4(7) The Treasury auctioned three new debt issues totaling $4.05 billion during the last week in January to refinance $4.5 billion of publicly held debt maturing in mid-February. The issues--$1.5 billion of a 3¼-year, 6-7/8 per cent note; $2.25 billion of a 7-year, 7 per cent note; and $300 million of a 19½-year, 7½ per cent bond--were well received by the market. All were sold at premiums; both the 7-year note and the 19½-year bond are currently trading at prices above their auction averages, while the price of the 3 -year note is close to its average. However, dealer awards in the auction were large--amounting to about $1.6 billion in total. since distributed only about one-fourth of these awards, Dealers have but they have not been pressing aggressively thus far to market their remaining holdings. (8) The table on the next page shows (in percentage annual rates of change) selected monetary and financial flows over various recent time periods. Appendix Table III compares money supply growth rates computed on a quarterly-average basis with those computed on a last-month-of-quarter basis. -5Past 3 Calendar Years Dec. '73 over Past 12 Months Jan. '74 over Past 6 Months Jan. '74 over Past 3 Months Jan. '74 over Past Month Jan. '74 over Dec. '70 Jan. '73 Jul. '73 Oct. '73 Dec. '73 Total reserves 9.0 8.4 10.2 14.3 35.8 Nonborrowed reserves 8.0 9.1 16.7 20.0 45.9 Reserves available to support private nonbank deposits 9.2 8.5 5.9 3.4 7.4 5.1 2.5 4.8 (M1 plus time deposits at commercial banks other than large 11.4 CD's) 8.3 7.9 8.7 6.5 (M2 plus deposits at thrift institutions) 13.1 8.2 7.0 8.4 6.7 11.7 10.9 7.6 6.9 12.3 14.5 12.5 8.4 7.5 15.8 Large CD's 1.0 1.7 0.3 0.6 2.7 Nonbank commercial paper 0.1 0.6 1.4 1.2 2.7 7.0 Concepts of Money M1 (currency plus demand deposits) 1/ M2 M3 -3.1 Bank Credit Total member banks deposits (bank credit proxy adj.) Loans and investments of commercial banks 2/ Short-term market paper (Monthly avg. change in billions) 1/ Other than interbank and U.S. 2/ Based on month-end figures. Government. Includes loans sold to affiliates and branches. NOTE: All items are based on averages of daily figures, except for data on total loans and investments of commercial banks, commercial paper, and thrift institutions--which are derived from either end-of-month or last Wednesday-ofmonth figures. Growth rates for reserve measures in this and subsequent tables are adjusted to remove the effect of discontinuities from breaks in the series when reserve requirements are changed. Prospective developments (9) Three policy alternatives are summarized below for Committee consideration (with more detailed figures shown in the table on p. 6a ). Alt. A Alt. B M1 6½ 5¾ 5 M2 10¾ 10 8¾ 9¼ 8¾ 8 RPD 5½--7½ 4½--6½ 3½-5½ M1 8¼--10¼ 7½--9½ 6¾--8¾ M2 11--13 10½--12½ 10--12 Federal funds rate range (inter-meeting period) 7½--8¾ 8¼--9½ 8¾-10 Alt. C Targets (1st & 2nd qtrs. combined) Credit proxy Associated ranges for February-March (10) Alternative B includes the 5¾ per cent annual growth rate for M1 for the period from December to June adopted by the Committee at its last meeting, which is depicted in the chart on the following page. longer-run growth of M2 implied by this alternative is The around 10 per cent, about 2 percentage points higher than indicated at the last Committee meeting.1/ The increase in M2 growth reflects the greater than expected strength of recent net inflows of consumer-type time deposits at banks and the lower average level of market interest rates that has already developed and is assumed to continue into the months ahead under this alternative. Alternatives A and C contemplate faster and slower rates of monetary growth, respectively. 1/ For M3, the implied growth rate is 9 per cent, about 1½ percentage points higher than indicated at the last meeting. MONEY SUPPLY AND LONGER RUN TARGET PATH RATIO SCALE, BILLIONS OF DOLLARS - 280 53/% GROWTH -1270 RATE OF GROWTH DEC. '72 TO DEC. '73 5.9% 260 I A M J A 1973 S 0 N D J F A M 1974 M J -6aAlternative Longer-Run Targets for Key Monetary Aggregates M M3 1 Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Alt, A Alt. B Alt. C 1973 Dec. 270.4 270.4 270.4 570.7 570.7 570.7 893.2 893.2 893.2 1974 Jan. Feb. Mar. 269.7 272.2 273.9 269.7 272.2 273.5 269.7 272.1 273.2 573.8 579.8 585.4 573.8 898.2 906.2 914.9 898.2 906.1 584.8 573.8 579.8 584.2 913.9 898.2 906.0 912.7 June 279.2 278.2 277.2 601.6 599.8 596.0 940.0 936.9 930.7 Quarters: 1974 1st Q. 2nd C. Months: Feb. Mar. 11.1 7.5 4.6 6.9 4.1 5.9 11.1 5.7 10.7 4.9 Adjusted Credit Proxy Alt. A Alt. B Alt. C 1973 1974 579.8 Rates of Growth 9.9 10.3 10.3 11.1 9.5 8.1 9.3 9.7 11.0 10.1 8.7 7.9 10.7 11.5 10.6 10.3 10.4 8.9 Total Reserves Alt. C Alt. B Alt. A Alt. A RPD Alt. B Alt. C 12.5 11.6 12.5 10.3 12.5 9.1 Dec. Jan. Feb. Mar. 449.6 454.2 454.6 457.9 449.6 454.2 454.6 457.5 449.6 454.2 454.6 457.1 35,105 35,852 35,132 34,839 35,105 35,852 35,131 34,781 35,105 35,852 35,130 34,727 32,912 32,802 32,800 33,153 32,912 32,802 32,799 33,096 32,912 32,802 32,798 33,041 June 470.5 469.4 467.8 35,812 35,662 35,528 33,791 33,643 33,514 7.4 11.0 7.0 10.4 6.7 9.4 11.2 1.1 8.7 1.1 7.7 1.1 6.6 -24.1 -16.0 Quarters: 1974 1st Q. 2nd Q. Months: Feb. Mar. 0.4 -0.3 10.1 0,9 9.2 6.6 7.7 5.9 6.6 5.2 5.7 -24.1 -12.0 -24.2 -13.8 -0.1 12.9 -0.1 -0.1 10.9 8.9 -7(11) A longer-run 5¾ per cent growth path for M1 is associated with lower interest rates than in the previous blue book mainly because of the downward revision in nominal GNP expansion projected by the staff. At the time of the last Committee meeting, economic activity at current prices was projected to expand at a 6½ per cent annual rate in the first half of the year, whereas a 5½ per cent expansion is now projected. This would be expected to lower transactions demands for money and therefore to reduce the interest rates associated with a given growth in the money supply. (12) With short-term interest rates having declined by around one percentage point since the last meeting, market rates have already moved close to levels that now seem consistent with a 5¾ per cent M 1 growth. Thus, little or no further decline would be expected under alternative B. The Federal funds rate range for that alternative is indicated at 8¼--9½ per cent, centering close to the recently prevailing level. (13) Recent interest rate declines will be working to sustain money demand in the months ahead, and interest-earning deposits. including demand for both cash balances In the February-March period, M1 growth in a 7½--9½ per cent annual rate range is indicated under alternative B. Because of the sizable shortfall of M 1 in January, such a rate of increase is needed to restore M1 to the desired longer-run growth path. Growth of M1 in February may be particularly large, reflecting perhaps a decline in U.S. Government deposits between January and February that is virtually unprecedented in size. The Treasury redeemed $800 million of maturing debt in mid-February and the cash deficit for February also seems to be a little larger than seasonal. (16) Growth in consumer-type time and savings deposits at banks is likely to continue generally strong, perhaps bolstered by a buildup in precautionary balances by consumers. The growth, however, will probably slacken a little from that of January, when net inflows (as in October) may have been enlarged somewhat by an increased amount of interest crediting (taking place on the final day of quarters) resulting from the higher ceiling rates. Under alternative A, growth in consumer- type time deposits would probably be even more rapid for a while--at least until further declines in market rates lead banks to begin reducing offering rates for consumer-type deposits. The expected rise of interest rates under alternative C would reduce the relative attractiveness of consumer-type time deposits, though, judging from recent experience, the effect of higher market rates might be more marked on the specialized thrift institutions than on commercial banks. (17) With funds available in volume through consumer-type time deposits, banks are not expected to be aggressive issuers of large CD's in the weeks ahead. Business loan demand at banks may not moderate substantially from the January pace until the rate of overall business inventory accumulation slackens, as is projected for the spring. However, mortgage and consumer credit demands are likely to be quite modest in the period immediately ahead, given the weakness in home buying and in sales of cars, mobile homes, and recreational equipment. (18) In time, the recent removal of capital controls and large international funds flows stemming from the rise in oil prices may come to have an appreciable effect on domestic banking aggregates and market -9conditions. Thus far, however, discernible effects have been minor, and have included mainly reports of offerings of longer-term dollar-denominated CD's to U.S. investors by foreign affiliates of U.S. banks, and reports of strong interest by U.S. and foreign corporations in shifting longer-term borrowing from the Euro-dollar market to U.S. capital markets. The potential for investment in the United States of funds from the oil-exporting countries is even more dramatic, but here too there has been little indication of sizable money-flows. Under the circumstances, we have not yet made any special allowance for the effects of international financial developments on domestic markets and aggregates. Proposed directive (19) Presented below are three alternative formulations for the operational paragraph of the directive, which are intended to correspond to the similarly lettered policy alternatives discussed in section. the preceding In all three alternatives, it is proposed to delete the reference to Treasury financing because the quarterly refunding announced on January 30 has been virtually completed. Alternative A To implement this policy, while taking account [DEL: the of and] financing Treasury forthcoming of international and domestic financial market developments, the Committee seeks to achieve bank reserve and money market conditions consistent with moderate SOMEWHAT GREATER growth in monetary aggregates over the months ahead. Alternative B To implement this policy, while taking account [DEL: the of and] financing Treasury forthcoming financial market developments, of international and domestic the Committee seeks to achieve bank reserve and money market conditions consistent with moderate growth in monetary aggregates over the months ahead. Alternative C To implement this policy, while taking account [DEL: the of and] financing Treasury forthcoming of international and domestic financial market developments, the Committee seeks to achieve bank reserve and money market conditions consistent with QUITE moderate growth in monetary aggregates over the months ahead. CHART 1 STRICTLY CONFIDENTIAL (FR) 2/15/74 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS REVISED SERIES BILLIONS OF DOLLARS 140 F 3 growth for Jan.-Feb. 7 %% 42/13/74) '~A7V\h N D 1973 r I I J I j I I M J 1973 I II S j D I I M I I I J 1974 j I I S *Break in Series, Actual Level of RPD After Changes in Reserve Requirements j5 J F 1974 -133 CHART 2 STRICTLY CONFIDENTIAL (FR) 2/15/74 MONETARY AGGREGATES REVISED SERIES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS 6% growth for Jan -feb 113/7471 II II I i I iI I I II I I I I . I. . IiI I . . . . I. . i L I. . i. BROADER MONEY SUPPLY M2 640 620 I 1973 1974 1 I N O 1973 I I J f 1974 CHART 3 STRICTLY CONIDENTIAL (FR) MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 1490 F j I II II II iII I 1I IB , I TOTAL RESERVES * \ \\ \1 1973 * Break in series, Actual Level of Total Reserves After Changes in Reserve Requirements \ \i \ 4 J. 1974 \ \ J 4\ 32 32 \ - CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS _1 RESERVES BORROWED PER CENT _1 13 PER CENT -1 12 INTEREST RATES Long-term 4 BILLIONS OF DOLLARS 3 f- VvvAAAAK, SNET BORROWFD _LLLL 1973 1 1 1I I I IL I L_ 1974 iLI 1973 1974 1973 1974 PER CENT -I 11 STRICTLY CONFIDENTIAL TABLE 1 -mmmme-mmme---mm-em FEBRUARY 15, BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) 1974 --------------------------------------------------------------------------------------------------------------------------------------REQUIRED RESERVES I AGGREGATE RESERVES II "-------------------------..--------------------------RESERVES AVAILABLE FOR SEASONALLY ADJUSTEU I PRIVATE NONBANK DEPOSITS -).--------------------------------------------------------* GOV*T AND CD'S AND OTHER PRIVATE NONBORROWED I 1 TOTAL ----------------------------INTERBANK NON DEP TIME DEP DEMAND I RESERVES I NON SEAS ADJ II RESERVES SEAS ADJ PERIOD -----------------------------------------------------------------------------------------------------------------------------( ) (7) (6) 5) 1 (4) (3) (2) I (1) I II 1 II MONTHLY LEVELS-SMILLIONSI ------------------------ I 1 11 1 2.142 4.069 8.430 19.976 33,463 34,857 II 32,752 32,714 1973--NOV. 2,193 3,918 8.460 20.227 33.807 35.105 II 1 33.167 32.912 I DEC. I It 1 9 3,050 3,807 8,525 20,305 1 349801 i1 35.852 33.870 32.802 1974--JAN. ( 2,332) ( 3,970) ( 8o588) (34147) 1 (20,065) 135.131) (32.883) 11 432,799) FEH. ANNUAL RATES OF CHANGE ---------------------QUARTERLYS 1973--3RD OTR. 4TH QTR. I I I I I9 I I I ( 1 JAN.-FEBe I 7.0 -0.1) FEB. ------------------ 6 13 I 32,921 32.747 33,075 32.488 32.892 1 32,618 32.779 1 1 I It II II I 1 ( 4.4) -0.3) 26,7 -1.6 14.4 12.1 -4.3 10.5 1 1.4 5.8 15.7 12.7 -1.8) 9 9.6) 3.4 -1.1 15.1 16.2 17.3 4.3 I 11 I 9 I 1 2 9 16 23 30 I 1 I 111 3.4) WEEKLY LEVELS-SMILLIONS ---------------- 9 -----1974--JAN. If 99 1 11.3 13.4 10.6 6.1 ( I 1.0 6.3 9.4 1974--JAN. FEB. 1 111 5.9) I MONTHLY1 1973-OCT. NOV. DEC. II I 14.2 1.4 ( 1974--IST QTR. f 1 I 35.8 ( -24.1 5.6) 45.9 ( -22.6) 1 9 1 ( 11.4) 33,562 33,482 34.562 33,749 33.878 II 9 II 11 f 11 11 99 35,312 35.752 36,521 35,747 35,640 34,102 34,976 35,533 349565 34,419 33.142 32.914 II II 35,169 35,176 34,171 34,023 I 1 1 9.2 8.9) 4.6 ( -14.2) -4.8) 1 9.1) 20361 20,423 20.396 20.211 200212 8,523 8.506 8.530 8.507 8,548 3,649 3,731 3.821 3,853 3,856 2.391 3,005 3,446 3.259 2,748 20033 19,913 8,578 8.566 3,906 3,992 2.551 2,396 ------------------------------------------------------------------------------------------------------------- NOTEI DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF JANUARY 22, THE COMMITTEE AGREED ON A RPO RANGE OF 4.75 TO 7.75 PERCENT FOR THE JAN-FES PERIOD. 1974 STRICTLY CONFIDENTIAL TABLE 2 -FEBRUARY -MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS* SEASONALLY ADJUSTED) l-----------------------------------------------*****************************m*----------*m*........... ------------ I -- I I PERIOD ---- MONEY SUPPLY BROAD I NARROW (M2) 1 (MI) I I I TIME AND SAVINGS DEPOSITS I I OTHER CD S I THAN CD S I TOTAL I U.S. ADJUSTED II I GOVT. II CREDIT II DEPOSITS I PROXY I NONDEPOSIT I SOURCES OF FUNDS I mm---------------------------------------------------------------------m-------------------------------1I(I (1) MONTHLY LFVELS-$RILLIONSI 1 I I I 197--JAN. FEM. PERCENT ANNUAL GROWTH ------------------- QiIARTERLY (2) (3) 268.8 270.4 I 1 269.7 (272.2) 566.7 570.7 I 1 447.5 449.6 573.8 (579.8) I 1 I 454.2 (454.6) I I I II (4) II II II 1 ---------------*I 17T1--NOV. DFC. I S.6 II 11 II 11 II I I -0.2 7.5 I 1974--IST QTR. 10.1 10.5 3.3 I (7) 1 I 5.8 4.9 6.1 ( 2.1) 297.8 300.3 359.9 363.1 I 304.1 (307.6) 369.6 (375.1)1 II It 14.0 5.8 I 7.1 7.4 62.0 62.8 7.5 ( 7.5) 1 II III II 1973--3R0 OTR. 4TM QTR. (*) (5) I I II 10.4 12.5 I ( f 9.9) .6) (14.7) (18.0) MONTHLY 10.8 1973--OCT. NOV. DEC SI.0 10.4 7.1 1974-JAN. FEB. 1 3.1 (11.1) I 10.9 8.5 I 4.0) 1 1 WEEKLY LEVELS-SBILLIONS ---------------------- I I 1974-JAN. 2 9 16 23 30 I 270,3 269.5 270.0 268.9 268.5 6 P 13 PE I I ----------- - 21.5 (17.9) ( 9.6) ( 6.7) II II II II (19.8) 572.5 572.0 573.8 573.7 573.7 452.5 453.1 1 (i 454.5 II 577.2 580.3 271.0 273.1 I f------------------------ 3.4 3.3 10.7 II II S11 I I FEB. 1 II IIIS67 II II If 12.3 S1.1) 6.5 (12.5) I I JAN.-FEB. 453.S ( 1. 1.6 ) 2.7 5.6 I I 6.8 6.5 6.2 4.5 I 455*7 455.5 II 1 16.1 11.0 10.1 I 15.2 (13.8) I 373.4 374.6 1 26 1 ----- NOTE: OATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. II I 1 (14.6) I.0 366.5 367.3 368.4 370.6 372.3 11 et I I I I 15 197 FEBRUARY 159 1974 302.2 302.5 303.7 304.8 305.2 306.2 307.2 1 I 64w3 648 64.7 65 8 67.1 672 67.4 I 7.0 7.1 7.3 7.7 7.8 7.2 7.7 1 --------------P - PRELIMINARY PE - PARTIALLY ESTIMATED ------------------------------------------------------------------------------------- -------- --- STRICTLY CONFIDENTIAL (FR) FEBRUARY 15, 1974 Table 3 RESERVE EFFECTS OF OPFN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) _ I Bills A -ran* 1 1C. p . ny. e . Marke t Coupon T Ifpie ___ - - I nrtHnna Agency TIssPs RP's 6r.l Daiv If Ne- -_ L Araverao e Tntlr J1 Onnpratnn V - l-Lrve C ffert A - _________ nvown O _rr 2/ 2 [ [n I - r i .A 1 1 Other 41 Member Open Marketl 3/ a ____a_= -d i in -~--tYI L_^ ~- ~e~ reserve ca teories - 46 available res. 5/ (6)+(7+(8 -(9' req. res. against uT.S.C. and Interb. - a,--- (4) 4 --- (11) Monthly 1971 -- July Aug. Sept Oct. 1,073 -753 -494 1,972 -1,008 1 ,862 NOv. Dec. 1974 -- -397 Jan Feb. March 27 533 726 1,148 -143 531 295 -902 -831 179 -100 2,416 -915 7 2,440 -1,307 1,386 -328 394 1,336 263 93 -282 -395 -68 -101 1,031 -253 697 773 702 -27 61 167 -286 501 -519 517 604 2,090 -818 -583 1,986 -850 978 1,150 -678 -646 -759 343 -337 -149 379 -190 -70 1,160 590 434 534 -130 546 795 680 475 1,005 860 475 895 -875 Weekly 1973 -- 1974 -- Dec. Jan. Feb. 5 12 19 26 -304 -33 1,002 420 2 9 16 23 30 659 205 -201 -159 148 6 13 20 27 -382 394 73 50 205 77 _____________ " - - 593 -1,393 2,752 -5,874 288 -1,510 3,900 -5,404 710 -824 868 613 188 -172 186 -447 -424 538 -370 152 5,124 -3,819 2,187 213 503 6,110 -3,616 1,986 44 747 705 -25 -155 -459 803 168 -434 213 193 39 -874 1,014 1,394 -795 -1,272 -1,864 2,288 -2,285 2,683 -685 269 -223 155 192 -502 - - _____________________- -304 -165 1,126 -782p 158p 303 720 326 -279p 8 8 -5 p 30 -746p 146 '- -.- -218 --- ~L- STprget available reserves 5/ - Represents change in System's portfolio from end-of-period to end-of- period; includes redemptions in regular bill auctions. Represents change in daily average level from preceding period. Includes matched sale-purchase transactions as well as RP's. Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, ad other F.R. accounts. Target change for January and February reflects the target adopted at the January 22, 1974 FOMC meeting. 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 the month. STRICTLY CONVIDENTrAL (FR) FEBRUARY 15, 1974 TABLE 4 SECURTTY DEALER POSITIONS AND BANK POSITIONS Millions of dollars U. S. Govt. Security Dealer Positions __ Period Bills__ Coupon Issues _ Member. Bank Reserves Position Dealer Positions Corporate Municipal Excess* Bonds Bonds Reserves Total (6) Borrowing at FRB** _ Sesnal Basin Reserve De 8 New York . t 38 Others (1) (2) (3) (4) (5) 796 -133 1,223 12 -5,635 -1,638 -5,720 -1,910 (7) (8) (9) 1972 -- High Low 4,291 1,916 1,585 -93 235 0 383 40 1973 -- High 3,796 1,299 197 384 631 2,561 -5,243 -10,661 897 -301 0 36 -240 688 -1,831 -4,048 Jan. Feb. Mar. 3,407 2,132 2,490 720 562 -50 27 77 24 177 123 125 289 207 177 1,161 1,594 1,825 -4,550 -4,187 -4,273 -5,469 -5,436 -5,847 Apr. May 2,457 1,894 106 421 12 66 60 151 255 161 1,688 1,843 -3,293 -3,019 -6,577 -5,872 June 2,281 562 33 120 234 1,851 75 -3,507 -6,443 Ituly 1,425 265 24 139 285 1,953 155 -2,460 -6,106 Aug. Sept. 1,690 2,745 39 395 0 6 70 80 177 216 2,165 1,852 163 148 -2,689 -3,173 -4,940 -5,355 Oct. Nov. Dec. 2,565 2,804 3,441 484 793 973 44 90 105 226 148 276 227 239 307 1,476 1,393 1,298 126 84 41 -3,814 -4,469 -4,682 -6,090 -8,186 -9,793 1974 -- Jan. *3,102 *540 114 254 165p 1,051p 18p -4,753 -10,893 1973 -- Dec. 5 12 19 26 3,090 3,737 3,796 3,312 746 910 1,144 1,096 100 136 108 74 275 225 327 277 446 -28 316 476 1,475 1,303 1,489 1,038 57 45 40 35 -3,625 -4,881 -5,017 -4,757 -8,594 -10,051 -10,661 -9,281 1974 -- Jan. 2 2,890 858 43 238 388 1,210 31 -4,418 -9,541 9 16 23 3,079 3,117 *3,238 611 533 *553 141 183 161 210 134 316 86 328 -83 776 988 1,182 19 20 13 -5,135 -6,189 -4,870 -10,615 -11,252 -11,987 30 *3,087 *420 42 371 2 6 1,221p 17p -3,229 -10,651 Low 1973 -- Feb. 6 13 20 27 NOTE! *2,759 *2,781 *898 *2,203 88 250p 226 150p 7 p tOlp 319p 998p 1,15 3 p 3 30 18p 15p 4 - ,115p -5,621p -10,501p -10, 46 1p Government security dealer trading positions are on a commnitent basis. iraaing positions, wnicn excluoe Treesury obils I nanceda y repurcnase agreOther security dealer positions are debt ments maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-tenr. issues still in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at Federal Reserve less net Federal funds purchases. Weekly data are daily averages for statement wreks, except for corporate and municipal issues in syndicate which are Friday figures. * STRICTLY CONFIDENTIAL ** Beginning with January 1973, monthly averages for excess reserves atid borrowings are weighted averages of statement week figures. CONFIDENTIAL (FR) FEBRUARY 15, 1974 TABLE 5 SELECTED INTEREST RATES Per cent Short-Term Federal Funds Period Treasury Bills 90-Day I-Year _ Paper Long-Term CD's New IAsue-NC 90-119 Day 60-89 Day A a Utiit Rently New l_ssue (7) 5.54 6.58 7.72 5.87 7.54 8.52 7.29 8.30 7.26 5.59 4.99 7.54 6.42 9.37 7.69 5.75 6.28 6.75 7.38 7.40 7.49 7.35 7.41 7.51 5.05 5.13 5.29 6.46 6.614 6.71 7.69 7.72 7.78 6.75 7.41 8.13 7.46 7.51 7.64 7.48 7.50 7.64 5.15 5.15 5.18 6.67 6.85 6.90 7.89 7.98 8.07 7.40 3.50 6.99 8.95 5.15 8.43 5.42 10.50 5.63 10.50 5.38 10.75 5.50 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 Apr. May June 7.12 7.84 8.49 6.76 6.36 7.19 6.51 6.63 7.05 7.13 7.26 8.00 7.04 7.44 7.98 3.03 1973 -- High Low 10.81 5.61 1973 -- Jan. Feb. Mar. Yields 4.96 5.50 3.13 5.13 3.18 Maturity) 7.12 5.38 3.75 5.38 Low Bond Buyer 7 46 5.50 3.60 High Offered FNMA Auction (11) 5.52 (3) U.S. Government (10-yr. Constant (10) (5) (2) Municipal (9) (6) (4) (1) 1972 -- 90-119 Day Commerc (8) July 10.40 8.01 7.97 9.26 9,09 9.19 8.01 7.97 5.40 7.13 8.46 Aug. Sept. 10.50 10.78 8.67 8.29 8.32 8,07 10.26 10.31 10.25 10.31 10.40 10.50 8.36 7.88 8.22 7.99 5.48 5.10 7.40 7.09 8.83 9.32 Oct. Nov. Dec. 10.01 10.03 9.95 7.22 7.83 7.45 7.17 7.40 7.01 9.14 9.11 9.28 9.15 9.06 9.44 9.08 8.91 9.13 7.90 7.90 8.00 7,94 7.94 8.04 5.05 5.18 5.12 6.79 6,73 6.74 9.01 8.84 8.78 1974 -- Jan. 9.65 7.77 7.01 8.86 9.05 8.83 8.21 8.22 5.22 6.99 8.71 1973 -- Dec. 5 12 19 26 10.17 10.04 10.18 9.52 7.36 7.55 7.44 7.40 7.31 7.27 6.77 6.79 9.33 9.48 9.18 9.16 9.50 9.50 9.38 9.38 9.25 9.13 9.13 9.00 8.06 7.97 7.98 -- 7.98 7.97 8.05 8.10 5.15 5.06 5.11 5.16 6.72 6.69 6.71 6.87 -8.78 2 9 16 23 30 9.87 9.76 9.77 9.60 9.47 7.48 7.57 7.89 7.93 7.79 6.88 7.01 7.09 7.04 6.96 9.16 8.98 8.88 8.98 8.65 9.38 9.13 9.13 9.00 8.63 9.00 8.88 8.88 8.88 8.50 -8.17 8.27 8.24 8.11 8.14 8.25 8.21 8.26 8.19 5.18 5.22 5.24 5.26 5.20 6.94 6.98 6.99 7.01 7.01 6 13 9.13 8.93 7.16 7.08 6.59 6.47 8.25 8.03 8.13 8.13 8.00 8.00 7.95 8.02 8.14 8.13 5.16 5.18 6.94 6.93 1974 -- Jan. Feb. -8.71 8.53 20 77 iNtes: ColuMhs 5and 6 re one-day Wednesday quotes. For Columns 7, 8 and 10 o 4 are statement week averages of daily data. Colul 9 is a ohe-day quote for Thursday following the end of the weekly date is the mid-point of the calendar week over which data are averaged. Weekly datA for rcoluiis 1 the statement week. average yield Column 11 gives PNNA suction data for the Monday preceding the end of the statehet week. In the bi-weekly auction tor short-term forward commitments for Oovernment underwritten mortgages. The FNMA auction yield is the Appendix Table I RESERVES AND MONETARY VARIABLES _ 7 .-. -1 Pero I I ~ P 9t. I*IMVrieL ... L,,,,, Re ry.. ... outal " (1) Mcne I aon.oroueu I (2) . February 15, 1974 Availdble to Support Pvt. Iinoiti --..I - (3) Ilnrs ck W.w"res M C i | (4) L L ' I- I (5) I (6) I _~ Link Clredit ilesnral Adj usted edit S PCoxv I 11) Other Thrift Time Other than Institutiou CD'a Ueposits-' I () (10) Total Total Loans and 1 Investments I Time 1 1 ( a1 (8) " I . [(12) I Nondeposit U.S. CGv't VFunds i Damnl iii; +9.3 78 7 +7.7 +7.2 +8.7 +6.9 +10.1 +9.3 +8.2 +9.4 +11.6 +10.6 +8.1 +11.2 +14.6 +12.6 +11.1 +16.7 +13.5 +11.3 +7.1 +17.5 +16.9 + 8.6 +14.4 + 7.7 +10.4 +19.4 -8.4 -7.6 +0.4 +J.0 +10.8 + 9.9 +11.0 + 4.1 +8.3 +11.5 +11.2 +11.3 +13.6 +14.7 +13.8 +13.8 +17.3 +15.4 +4.4 + 6.0 -0.2 +0.6 1st Half 1973 2nd Half 1973 &gu0rterly + 6.7 + 8.6 + 1.6 +12.7 +10. + 7.8 +13.8 + 7.0 +16.6 + 8.0 +10.3 +11.6 +11.7 + 5.3 +18.6 + 0.8 +1.2 +1.8 -0.4 +0.1 +0.3 +0.3 +6.0 +7.2 +10.6 + 7.8 ~ 4~ (Dollar Change in Billions) (Per Cent Annual Rdtes of Growth) 1970 1971 1972 1973 Smt-Annu ly isL Hll 1972 2nd lldlf 1972 1st 2nd 3rd 4th QCr. Qtr. Qtv. Qtr. 1972 1972 1972 1972 + 8.7 +12.6 + 4.4 +15.1 + 9.1 +12.6 - 0.9 + 9.2 + 9.6 + 6.9 +10.4 +12.2 +10.5 +11.6 +10.2 +12.1 +15.7 +11.1 +13,0 +15.8 +15.5 +11.7 +12.7 +11.4 +18.9 +14.7 +16.2 +13.9 + 0.7 + 3.7 + 2.4 Ist 2nd 3rd 4th Qtr. QCr. Qtr. Qtr. 1973 1973 1973 1973 + 6.4 + 6.9 +10.6 +6.1 - 3.6 + 7.0 +11.3 +13.4 + 7.8 +12.5 +14.2 +1.4 +14.6 +12.6 +10.5 +3.3 +19.9 +12.7 +11.4 +4.4 + 9.9 +10.4 +10.4 +12.5 +13.6 +9.4 +3.1 +7.5 +11.2 + 7.4 +4.7 - 3.9 +0.5 +0.7 +1.7 +0.1 +30.1 -21.1 +10.5 +14.7 +26.8 -38.5 +1.8 +20.1 +0,5 +0.2 +24.9 -13.5 +21.9 +26.7 -1.6 +14.4 +45.9 +15.9 -2.9 +10.3 +10.0 +9.9 +17.3 +19.5 +9.0 +13.3 +1.0 -6.3 +9.4 +7.0 +9.7 +11.1 +22.3 +15.4 +11.0 +11,1 +8.6 +17.0 +5.7 +1.6 +2.7 +5.6 +12.3 +17.8 +23.7 +17.2 +13.1 +16.6 +8.2 +13.3 +16.7 +4.1 +6.7 +5.0 +1.5 +15.8 +12.9 + 7.0 + 9.6 +10.0 +10.3 +10.7 + 7.6 +13.0 +10.4 +16.1 +11.0 +10.1 +15,2 +15.8 +14.4 +10.2 +9.4 +7.8 +1I.8 +6.5 + 1.3 + 4.4 + 5.5 + 3.8 + 2.9 +0.7 + 1.9 + 2.4 + 0.4 - 2.9 - 1.8 + 0.8 + 2.7 +0.6 -0.5 +0.4 +0.2 +0.3 +0.2 +0.9 +0.6 +0.2 -0.4 +0.2 +0.3 + 3.6 Monthly 1973--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1974-Jan. +5.4 +0.5 +27.2 -5.1 +9.5 +12.1 -4.3 +10.5 +35.8 - p - Preliminary NOTE: Reserve Requirements October 1, 1970. I/ Growth rates on Eurodollar borrowings are included beginning October 16, are based on estimated monthly average - +2.7 +6.4 +7.2 +8.6 +7.1 I---- t---.I +0.1 I.- 1969, and requirements on bank-related commercial paper are included beginning levels derived by averaging end of current _.___ Other Bank Credit Keasurai month end end of previous month reported data. February 15, 1974 Appendix Table 11 RESERVES 4ND MONETARY VARIABLES (Seasonally adjusted, billins of dollars) RESERVES Available to Support Pvt. Depo ts NonPertod Total sANK MONEYSTOCK MEASURES borrowed (2) M De. Pvc. Total adjusted Credit Proxy 3 (3) (6) (7) C ESU4SW HAIIT Total Loan 6 In ents OTBIR Total Time (9) (19) Time Other than CO's uDepositta Thrift I Institution Deposita- (11) COund (14) 1970 1971 1972 29,193 31,299 31,410 28,861 31,173 30,160 27,099 23,94U 29,053 221 2 235.2 255.7 172.2 182.6 198.7 425.2 473.0 525.5 641.2 726 9 822.4 332.9 364.3 406.4 438,5 487.6 559.D 229.2 270.9 313.3 216.1 253.9 296.9 1973--Jan. Feb Hir. 32,199 31,634 31,910 31,037 30,040 30,085 29,439 29, 368 29,621 256.7 257.9 258.1 199.6 200.4 200.1 529.6 532.3 534.6 830.4 836.7 841.7 409.7 413.5 421.2 567.3 578.5 586.8 317.6 323.5 331.1 300.8 304.4 307.0 6.7 6.1 7.6 Apr. May June 32,300 32,445 32,459 30,589 30,602 30,b08 29,867 30,114 30,548 259.4 262.4 265.5 200.8 203.4 206.2 538.3 543.6 549.4 847,7 855.0 863.5 426.6 430.5 434.5 593.2 601,4 605.5 337.3 342.6 345.8 309.4 311.4 314.2 7.1 5.2 5.3 July Aug. Sept. 33,576 33,906 34,173 31,622 31,741 32,321 31,385 .2,039 32,394 266.4 266.2 265.4 207.0 206.4 205.2 552.0 554.9 556.6 867.9 870.9 873.2 437.6 443.8 445.9 612.2 620.7 622.8 349.4 355.0 357.9 315.9 315.9 316.6 3.9 4.8 5.0 Oct. Nov. Dec. 34,942 34,857 35,105 33,466 33,463 33,807 32,845 32,714 32,912 266.5 268.8 270.4 206.1 207.9 208.8 561.6 566.7 570.7 879.8 886.9 893.2 446.5 447.5 449.6 626.3 628.9 629.7 358.9 359.9 363.1 318.3 320.2 322.5 6.0 5.8 4.9 35,852 34,801 32,802 269.7 207.9 573.8 898.2 454.2 638.0 369.6 324.4 6.1 Dec. Dec. Dec. 1974--Jan. Weekly: 1973--Dec. 1974--Jan. Feb. 11.6 5 12 19 26 35,108 34,623 35,211 35,330 33,633 33,321 33,722 34,292 33,041 32,561 32,869 33,209 269.1 270.7 270.9 271.0 208.1 209.2 209.4 208.9 568.2 569.7 571.8 571.6 447.6 447.9 449.3 452.5 299.1 298.9 300.9 300.7 7.2 7.6 7.6 7.3 2 9 16 23 30 35,312 35,752 36,521 35,747 p 35,640 34,102 34,976 35,533 34,565 34,419 32,921 32,747 33,075 32,488 32,892 270.3 269.5 270.0 268.9 268.5 208.8 207.8 208.2 206.9 206.6 572.5 572.0 573.8 573.7 573.7 452.5 453.1 453,5 454.5 454.1 302.2 302.5 303.7 304.8 305.2 7.0 1. I 7.3 7.7 7.8 p 35,169 34,171 32,618 271.0 208.6 577.2 455.7 306.2 7.2 6 - p - Preliminary NOTE: Reserve requirements ~ ~ on Eurodollar borrowings -~ ~ ~- 4 I dre included beginning QOtler -~_____ 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank ilepositb subject to reserve requirements, bank-related commercial paper and Eurodollar borrowings of U.S. banks. Weekly data ole daily averages for btatemetL weeks. onthly data are daily averages except for nonbatk coamercial paper figures which are for last day of month. 1/ U.S. ov't Dpen Estimated monthly average Weekly data ate not avuilable for MN total loans and investments and thrift institution deposits. levels derived by aver.ing end of current month and end of previous month reported data. 6.5 6.1 6.1 Appendix Table III Growth Rate in Money Supply (Per cent change at an annual rate) *1 M M 1972 1973 M3 M2 M Q Q M I 9.0 5.3 12.3 11.0 14.6 13.2 II 6.2 8.2 8.9 9.8 10.9 12.0 III 8.7 8.2 10.8 10.8 12.8 12.6 IV 9.9 8.4 10.6 10.2 11.8 11.8 I 3.8 7.0 6.9 8.8 9.4 10.7 II III IV 11.5 7.5 11.1 8.7 10.4 9.1 -0.2 5.5 5.2 7.9 4.5 7.2 7.5 3.9 10.1 8.5 9.2 7.3 M = Annual rates of growth calculated from average levels in the final months of the quarters. Q = Annual rates calculated from average levels in all three months of the quarters. 

Federal Reserve (1974, February 19). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19740220

@misc{wtfs_bluebook_19740220,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1974},
  month = {Feb},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19740220},
  note = {Retrieved via When the Fed Speaks corpus}
}