Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. (CONFIDENTIAL FR) June 14, 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 June 14, CONFIDENTIAL (FR) 1974 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) M 1 increased at about a 5 per cent annual rate in May but there was an acceleration in early June, so that growth for the May-June period now appears likely to fall just under the 7 per cent upper end of the Committee's range of tolerance. M2 has displayed a generally similar pattern of monthly change, rising at a 5½ per cent annual rate in May and then at a considerably stronger pace so far in June, when there has been a larger than expected rise in large time deposits other than money market CD's. For May and June combined, M2 appears likely to grow at a rate roughly equal to the 7½ per cent top of its range of tolerance. And RPD growth is near the upper end of its range. Growth of Monetary Aggregates and RPD's in April-May Target Period Reserve and Monetary Aggregates (Growth at SAAR in per cent) RPD's Range of Tolerance Latest Estimates 13-20 19.4 M1 3-7 6.7 M2 4½-7½ 7.6 Avg. for statement Memo: Federal funds rate (per cent per annum) 11-11¾1/ week ending May 22 10.96 June 5 11.45 June 12 11.60 1/ The range incorporates the increase in the upper limit agreed upon in response to the wire of June 10. -2(2) Growth in the bank credit proxy over May and June is estimated at an average annual rate of 14 per cent, below the extraordinary April pace but still strong. Banks greatly increased their borrowings in the CD market in May in view of the continued generally strong loan demands and in anticipation of large maturities in June. In late May and early June, CD growth has slowed substantially, however. Borrowing in the Euro-dollar and commercial paper markets was also relatively strong until late May and then abated. (3) Deposit growth at nonbank thrift institutions was at only a 1½ per cent annual rate in May, and available data for early June suggests that inflows have picked up only slightly. This conforms generally to the experience of banks with respect to passbook savings and small time deposits. Time and savings deposit accounts at banks subject to Regulation Q ceilings have shown little, if any, growth in recent months. Growth in bank time deposits has been in the form of money market CD's and other time deposits over $100,000. (4) Short- and long-term interest rates have fluctuated in a relatively narrow range in recent weeks. At times during the inter- meeting period, market sentiment appeared to be developing that interest rates had reached peak levels and were about to decline. Scattered declines in bank prime loan rates gave credence to this view, and the stock market rallied. Market interest rates showed little change, because the money market remained taut and the Account Management sold a large block of bills timed so as to help dampen market expectations of rate declines. -3(5) With the potential for a resurgence in bullish sentiment still present, however, Committee members concurred with Chairman Burns' recommendation of June 10 that the upper limit of the funds rate range be raised to 11¾ per cent, on the understanding that the Desk would use this leeway if market interest rates came under downward pressure or if the monetary aggregates began growing at rates that appeared to be testing the upper limits of their tolerance ranges. In recent days, given the latest estimates for the aggregates, the Desk has been aiming at a Federal funds rate in the area of 11½-1l¾ per cent. The 3-month bill rate was about 8.30 per cent at the close on Friday, up about 10 basis points from its level at the time of the last Committee meeting. (6) 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. Projected figures on the two bases are shown in appendix table IV for the three alternatives presented in the next section. -4Average of Past Three Calendar Years 1971 -1973 Past Twelve Months May '74 Past Six Months May '74 Past Three Months May '74 Past Month May '74 over over over over May '73 Nov.'73 Feb.'74 Apr.'74 Total reserves 8.5 9.6 11.5 15.9 20.0 Nonborrowed reserves 7.6 7.7 4.8 -0.1 -9.0 Reserves available to support private nonbank deposits 8.8 10.8 11.6 17.7 20.9 7.0 6.4 7.5 8.2 5.2 M2 (M1 plus time deposits at commercial banks other than large CD's) 10.4 9.0 9.0 7.6 5.5 11.7 8.3 8.4 7.0 4.4 Total member banks deposits (bank credit proxy adj.) 10.5 11.0 13.5 20.2 16.8 Loans and investments of commercial banks 2/ 12.8 12.1 13.1 14.5 10.2 1.0 1.7 3.2 4.9 5.8 Concepts of Money M 1 (currency plus demand deposits) 1/ M3 (M2 plus deposits at thrift institutions) Bank Credit Short-term Market Paper (Monthly average change in billions) Large CD's Nonbank commercial paper .2 .6 .3 -.8 .8 1/ Other than interbank and U.S. Government. 2/ Based on month-end figures. Includes loans sold to affiliates and branches. NOTE: All items are based on average of daily figures, except for data on total loans and investments of commercial banks, commercial paper, and institutions--which are derived from either end-of-month or last of-month figures. Growth rates for reserve measures in this and tables are adjusted to remove the effect of discontinuities from the series when reserve requirements are changed. thrift Wednesdaysubsequent breaks in Prospective developments (7) Alternatives for Committee consideration are summarized below (with more detailed figures shown in the table on p.5a). Alt. A Alt. B Alt. C M1 6¾ 5¾ 4¾ M2 8 6¾ 5¼ Credit proxy 10½ 9¾ 8¾ 13¼-15¼ 12½-14½ 11½-13½ M1 6½-8½ 6-8 5½-7½ M2 7½-9½ 7-9 6½-8½ 10¾-12¼ 11½-13 Targets (3rd & 4th qtrs. combined) Associated ranges for June-July RPD Federal funds rate range 10-11½ (inter-meeting period) (8) At its last meeting the Committee adopted longer-run targets for the second and third quarters combined that included a 5½ per cent annual rate of growth in M 1 from the March level. Extension of such a growth rate to year-end is illustrated by the dashed line in the chart on the following page. Rates of growth consistent with that extended path are shown in alternative C. These include a 4¾ per cent annual rate of growth in M 1 between June and year-end, which would compensate for the estimated 7 per cent annual rate of growth for M l in the second quarter and would lead to an average 5½ per cent growth for the last three quarters of the year. MONEY SUPPLY AND LONGER RUN TARGET PATH RATIO SCALE, BILLIONS OF DOLLARS -- Or MAR. '74 5V/2% GROWTH --5 3ROWTH -285 6.4% S275 265 O N 1973 D J F M A M J 1974 J A S O N D -5aAlternative Longer-Run Targets for Key Monetary Aggregates M1 1974 Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C May June July 279.3 281.3 282.8 279.3 281.2 282.5 279.3 281.1 282.3 592.9 597.8 601.4 592.9 597.7 600.9 592.9 597.5 600.3 925.0 931.0 935.9 925.0 930.8 935.1 925.0 930.6 934.3 Sept. 285.6 284.9 284.3 608.9 607.5 605.6 946.0 943.5 941.2 Dec. 291.0 289.4 287.8 622.1 618.1 613.2 963.1 956.7 951.0 6.6 6.4 7.2 6.6 5.5 5.6 6.5 4.6 4.2 7.5 5.5 7.3 4.8 Rates of Growth Quarters: 1974 M3 M2 2nd Q. 3rd Q. 4th Q. 7.4 6.1 7.5 7.2 5.3 6.3 7.1 4.6 4.9 7.9 7.4 8.7 7.8 6.6 7.0 7.7 5.4 5.0 8.6 6.4 8.2 5.5 7.7 5.1 9.9 7.2 9.7 6.4 9.3 5.6 Months: June July 1974 1974 Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 477.8 482,0 484.2 477.8 481.9 483.9 36,500 36,677 37,070 36,500 36,666 37,020 36,500 36,655 36,970 34,246 34,763 35,064 34,246 34,751 35,015 34,246 34,740 34,965 495.5 494.9 494.0 37,497 37,424 37,343 35,655 35,581 35,500 507.4 505.5 503.1 38,995 38,788 38,583 36,567 36,363 36,161 19.7 8.3 14.6 19.5 7.5 13.3 19.9 10.3 10.2 19.7 9.5 8.8 19.6 8.7 7.4 5.5 11.6 5.1 18.1 10.4 17.7 9.1 17.3 7.8 Alt May June July 477.8 482.1 484.4 Sept. Dec. Quarters: 2nd Q. 3rd Q. 4th Q, RPD Total Reserves Adjusted Credit Proxy Alt. A B 20.1 11.1 9.6 20.0 10.7 8.6 19.9 7.4 19.8 8.9 16.0 10.8 5.7 10.5 5.5 10.3 5.0 5.8 12.9 10.0 Months: June July 10.3 -6(9) The staff expects that attainment of the alternative C aggregates would require a further rise in the Federal funds rate between now and the next Committee meeting to a consistent trading range around 12 per cent or a little above. Projected growth in nominal GNP for the second half of the year is now slightly slower than at the time of the last Committee meeting, but the growth rates for the third and fourth quarters--annual rate of 8.8 and 10 per cent, respectively--still suggest sizable increases in transactions demands for cash. (10) A rise in the funds rate over the weeks ahead would be associated with further increases in interest rates generally. The increases could be quite marked as expectations that market interest rates had peaked--already coming into question--turn into expectations of further rise. If the funds rate rose to the 12 per cent area, the 3-month bill rate might well fluctuate in a 8½-9½ per cent range over the weeks ahead, the 3-month commercial paper rate would rise above its earlier 11 per cent peak, and the prime loan rate would again be under substantial upward pressure. However, increases in short-term market rates, particularly in the Treasury bill area, could be tempered if foreign official demand for U.S. Treasury securities were to strengthen. Rising short rates would probably be communicated to longer-term markets also, given sizable corporate and municipal security offerings in prospect. The increase in bond yields, at least on the highest quality issues, would be moderated, however, to the extent that evidence of monetary restraint tends to make investors somewhat less pessimistic about the outlook for inflation. (11) The rise in interest rates expected under alternative C would further constrain inflows of consumer-type time and savings -7deposits to banks and thrift institutions, given current Regulation Q ceilings. As a result, growth in M 2 and M3 for the second half of 1974 would be reduced to about 5¼ and 4½ per cent, at annual rates, Banks would be forced to raise interest rates offered for respectively. CD's and Euro-dollars. However, we would expect considerable moderation in the amount of net new funds raised through these instruments; bank loan growth would probably be cut back by tighter lending terms, and banks would probably become increasingly wary of adding to CD holdings at ever higher interest costs. Marginal financial and business firms might find it difficult to refinance maturing debts as banks and other lenders become more selective. Financial strains would increase generally, and the odds on failure of some of the more vulnerable firms would rise. (12) Alternative B encompasses a 5¾ per cent growth rate for M1-- and growth rates of 6¾ and 5½ per cent for M 2 and M 3 respectively--in the second half of 1974. These aggregate growth rates appear to be con- sistent with a Federal funds rate around 11½-11¾ per cent, close to the center of the range for this alternative. Thus, upward interest rate pressure under this alternative would be considerably less than under alternative C. At this writing, interest rates generally appear to be in process of adjusting to Federal funds trading at rates somewhat above 11 per cent. This process may be completed by, or shortly after, the forthcoming Committee meeting; and little further, if any, upward rate movement is likely to develop subsequently if the funds rate remains around the center of alternative B range. (13) Assuming the prevailing money market conditions, M1 growth in the June-July period is likely to be in a 6-8 per cent annual rate range. On the basis of partial data for the early part of June, -8we would expect June growth to be on the order of 8 per cent at an annual rate. Given the over-all interest rate increase of the past few months, and the end of the tax refund period, growth in M 1 is expected to slow in July and subsequent months of the third quarter. quarter as a whole, M For the third growth is indicated to be 5¼ per cent at prevailing money market conditions--though rising to 6¼ per cent in the fourth quarter when nominal GNP growth is projected to expand somewhat more rapidly. (14) The substantial injection of nonborrowed reserves that seems necessary to attain the aggregates of alternative A would probably lead to an easing of money market conditions. A downward movement in the funds rate--and especially a drop to the 10¾ per cent mid-point of the range shown for this alternative--would be accompanied by a sharp decline in market interest rates as investors came to believe that monetary policy had made a major turn. term markets. The decline would be especially large in short- In the Treasury bill market, the 3-month bill rate could drop to below 7 per cent in view of the limited market supply at the moment and the sizable volume of maturing mid-June tax bills. Given the basic strength of credit demands, however, the immediate decline in interest rates would probably be followed by a gradual upward readjustment if the Federal funds rate were to hold around 10¾ per cent. Proposed directive language (15) 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 the preceding section. As will be noted, alternative A refers to growth rates in the monetary aggregates prevailing over recent months. Growth in M1 was at an annual rate of about 7 per cent in the first quarter, and including an estimate of 8.2 per cent for June, it is about 7 per cent for the second quarter as well. The comparable rates for M 2 are about 10 per cent for the first quarter and about 8 per cent for the second quarter. Alternative A To implement this policy, while taking account of developments in domestic and international financial markets, the Committee seeks to [DEL: restrictive] prevailing the about maintain that] provided ACHIEVE BANK RESERVE AND money market conditions [DEL: CONSISTENT WITH GROWTH IN the monetary aggregates AT ABOUT THE at growing be to appear RATES PREVAILING OVER RECENT MONTHS [DEL: rates within the specified tolerance]. of ranges -10Alternative B To implement this policy, while taking account of developments in domestic and international financial markets, the Committee seeks to [DEL: restrictive] prevailing the about maintain that [DEL: ACHIEVE BANK RESERVE AND money market conditions provided the] THAT WOULD MODERATE GROWTH IN monetary aggregates OVER THE specified the within rates at growing be to appear MONTHS AHEAD [DEL: tolerance]. of ranges Alternative C To implement this policy, while taking account of developments in domestic and international financial markets, restrictive] prevailing the about maintain the Committee seeks to [DEL: that provided ACIIEVE BANK RESERVE AND money market conditions [DEL: the] THAT WOULD SLOW APPRECIABLY THE GROWTH IN monetary aggregates OVER THE MONTHS AHEAD [DEL: the within rates at growing be to appear specified ranges of tolerance]. (16) In the event that the Committee again wishes to couch the operational paragraph of the directive in terms of money market conditions, the specifications of alternative B might be associated with the language used in the directive adopted at the last meeting-namely, that "...the Committee seeks to maintain about the prevailing restrictive money market conditions, provided that the monetary aggregates appear to be growing at rates within the specified ranges of tolerance." CHART 1 STRICTLY CONFIDENTIAL (FR) 6/14/74 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS l40 for May-Juine 13% growth A M 1974 1-" ll lI I II I I I M J 1973 * Break n Se- es Actuo S D iJ I 1iif11 M J S 1974 e o RPD After Cra-ges r Reser\e Reqcnemei's I ', ' D i I SI M J J \ CHART 2 ,ONF DENTilr_ iF 6/14/74 STPICT, MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS -61 71/2 % growth for May-June 6,12 / / 1973 1974 M A 4 M 1974 4' ~ J -','i J STRICTLY CONFIDENTIAL (FR) 6/14/74 CHART 3 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF TOTAL RESERVES * #IMv4f' 1974 1973 Break seq.e Actua ee,* ct Tcta: ResE \e iter Changes r Resere Requrements CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS PER CENT 12 INTEREST RATES Short-term 10 - 8 B 4 BILLIONS OF DOLLARS -1 3 1973 1974 1973 1974 TABLF STRICTLY CONFIDENTIAL 1 JUNE RANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) 14, 1974 I RESERVES AVAILAPLE FOR PRIVATE NONBANK DEPOSTTS REQUIRED RESERVES I AFGPFGATF RESERVES ---------------------------------------------------I SEASONALLY ADJUSTED I i--------------------------------------------------------------------------------------------I SEAS ADJ PEROD I I MONTHLY LEVFLS-SMILLTONSI ------------I 1974--MAR. I APR. I MAY JUN. ANNUAL RATFS fl) 33,117 33,660 34,246 (34,751) I I NON SEAS ADJ (7?) 37,888 33,743 34,062 (34,396) I TOTAL RESERVES 1 NONBORROWED RESERVES (3) (4) 34,949 35,902 36.500 (36.666) 33,634 34,166 339,10 (33,720) CD'S AND NON DEP I I PRIVATE DEMAND OTHER TIME DFP | (51 (6) (7) 8,654 8,651 8,721 ( 8,794) 4,037 4,416 5,031 ( 5379) 20,291 20,411 20,341 (20.400) GOV'T AND INTERBANK (8) 1,831 2,242 2,254 (' 1,915) OF CHANGE I ---OUART!ERLY: 197-- -4TH OTR. 1974- -1ST OTR. 2ND OTR. 6.2 S19.7) MONTHILY: 1974- -MAR. APR. MAY JUN. WEEKLY LEVELS- -SMTLLTCNS -------------- ------- MAY JUN. 5 12 ( 20.0 5.5) S12.8) 1.5 1.0) -10.0 19.0 -9.0 (-6.7) 37.7 ( 5.8 13.4 -5.4 19.4) ( -7.P) 1.3 S 2.3) 15.1 7.1 -4.1 ( 4.0) S-0.1) 12.7 ( 9.2 6.5) ( 7.4 -0.4 9.7 10.0) ( 9.0) I- 3 10 17 24 1 8 15 22 29 1.7 19.7) f 11.9 10.7 ?0.0 17.7) MAY-JUN. APR. 6.1 1.4 I I I I I I 20,263 20,218 20,468 8,652 8,633 8.628 8,657 4,099 4,204 4,369 4,566 2,158 1,923 2,367 2,281 20,705 8,693 20,385 20,239 20,308 20,337 8,698 8,727 8,715 4,702 4,855 4,9(3 5,098 5,172 2,464 2,234 2,468 2,400 2,013 5,316 5,401 1,772 1,720 33,240 33,117 33,794 319722 33,116 32,849 33,835 33,991 35,398 35,040 36,161 36,003 33,895 33,846 34,345 34,064 34,277 34,151 34,104 34,218 34,363 34,701 34,304 34,029 33,822 33,973 36,742 36,385 36,572 36,628 36,376 34,585 34,768 34,595 33,540 32,771 34,743 34,407 34,168 33.849 36,51; 36,127 33,461 33,397 20,487 20,089 8,727 20,359 8,746 8,703 NOTF: DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. AT THE FOMC MFFTING OF MAY 21, TuE COMMITTEE AGREED ON A RPO RANGE OF 13 TO 20 PERCENT FOR THE MAY-JUNE PERIOD. 1974 TABLE STRICTLY CONFIDENTIAL 2 JUNE MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED) I I PERIOD I MONEY SUPPLY I BROAD NARROW (M2) I (M1) (1) PERCENT ANNUAL GROWTH --------------------OUARTFRLY 1973--4TH I II U.S. GOVT. DEPOSITS I 459.1 471.2 477.8 (482.0) I I I I (4) TIMF AND SAVINGS DFPOSITS I THER I CD S I THAN CD S I TOTAL (5) I (6) (7) 310.0 312.1 313.6 ( 316.5) 67.7 75.4 I NONDFPOSIT I SOURCES OF FUNDS I I (8) I II II I 3.7 4.5 3.8 ( 3.5) I1 I 377.7 387.4 394.8 (99.1) 8.6 9.6 10.7 (10.51 81.2 (P2.71 11I 6.1 3.3 11.0 8.9 OTR. 586.2 590.2 592.9 (597.7) I II (3) I I I ADJUSTED CREDTT PROXY I I 276.2 278.1 770.3 (281.21 I I (2) I MONTHLY LEVELS-SPTLLTONSI ------------------------I 1974--MAR. APP. MAY JUN. I 14, 1974 12.6 I T0R. 1974--1ST 2ND OTR. MONTHLY ----- 1974--MAR. APR. MAY JUN. 7.1 ( 7.21 MAY-JUN. 11.0 8.3 5.2 ( 8.2) 3 17 24 JUN. 15.6 (22.7) 12.5 ( 8.4) 8.9 8.2 5.5 9.7) 11.3 31.6 16.8 (10.5) 9.3 30.8 22.9 (13.1) 7.0 8.1 5.8 (11.1) I (18.1) ( 8.5) 1 8 15 ? 22 5 P 12 PFI I I I II II I I 277.5 77'.7 280.1 277.8 588.1 589.3 592.3 590.2 466.3 468.4 472.9 471.8 4.8 5.0 5.0 4.0 382.0 385.4 387.0 389.2 310.5 311.5 312.2 312.3 776.8 278.6 279.5 280.6 78.1 589.6 591.3 593.1 593.8 592.7 473.8 476.4 476.6 478.5 478.5 4.4 5.3 3.3 3.2 3.0 390.8 392.4 394.2 395.2 397.1 312.7 313.6 313.3 314.6 281.0 781.1 596.5 597.1 482.0 482.4 3.7 4.9 397.7 398.3 315.6 316.0 I I ----- - - - - - - - - - -'---- - - - - - ------------------- II I I II I I I (13.8 ( 7.6) I I I 10 MAY I ( 6.7) WFEKLY LEVELS-SPTLLIONS APR. 8.5 (20.0) I I I ----------------------- 9.9 ( 7.8) -- 112.8 I 71.4 73.9 74.8 76.9 78.0 82.2 82.3 79.7 7239I 80.6 82.0 82.5 71.4 I - - - - - -- - - - - - - -- - - - - --- NOTE: DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. 9.5 9.3 9.4 9.7 I 10.2 10.4 10.e 11.1 11.0 10.6 10.2 - - - - - - P - PRELIMINARY PE - PARTIALLY ESTIMATED STRICTLY CONFIDENTIAL (FR) JUNE 14, 1974 TABLE 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Rills & Accept. (1) Open Market Operations 1/ Coupon Agency RP's Issues Issues Net 3/ (3) (4) (2) Total (5) Daily Average Reserve Effect 2/ Open Marker A Member Other 4/ Operations Bank Borrowing Factors (8) (7) (6) A in reserve categories req. rea. against available res. 5/ U.S.G. and interb. (6)+(7)+(8)-(9) (10) (9) A Tar1et available reserves 5/ (11) Monthly 1973 -- Nov. Dec. 1974 -- -1,008 1,862 533 226 71 128 -902 -831 -1,307 1,386 394 1,336 -68 -101 -646 -759 -190 -70 -130 546 860 475 Jan. Feb. March -397 -32 -64 179 30 190 -10 74 122 -100 -1,531 -328 71 1,780 1,031 9 -74 -254 143 166 698 -1,505 -358 773 -356 -323 702 -997 57 895 -875 -30 April May June 790 653 172 207 312 185 -485 1,111 789 2,155 922 1,970 362 865 -338 2 2 -2, 7 p 173 9 20 p 773 354p July Weekly 1974 I/ 2/ 3/ 4/ 5/ - Apr. 3 10 17 24 -5 206 -33 ---172 --119 251 532 142 251 -5 738 399 494 -785 963 156 -210 -309 622 123 385 653 -331 -480 May 1 8 15 22 29 526 267 176 127 80 ----- 193 -201 -15 220 494 446 -2,609 3,808 939 761 622 -2,281 3,873 1,103 483 454 86 -692 218 -540 360 1,111 517 June 5 12 19 26 42 -370 207 -- -72 -6,093 4,068 -5,844 3,626 -23 -1,892 -551 -325 532 -174 268 -357 137 -267 986 156 -531 -364 -592 -1,258 6 -13 p 80 -24 497 146 -462p 710 -397 -275 -207 151p 580p 1,740p -189p -167p 195o -310p 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 for 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 F.R. accounts. Target change for May and June reflects the target adopted at the May 21, 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. 315 -130 STRICTLY CONFIDENTIAL (FR) JUNE 14, 1974 TABLE 4 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of dollars U.S. Govt. Security Dealer Positions Period Bills (1) 3,238 94 2,203 -39 Jufne 1,894 2,281 July Aug. Sept. Oct. Nov. (6) 631 -240 Seasonal 8 New York (8) 2,561 688 38 Others (9) -5,243 -1,831 -10,661 - 4,048 -12,843 - 8,711 421 562 161 234 1,843 1,851 30 75 -3,019 -3,507 - 5,872 - 6,443 1,425 1,690 2,745 265 39 395 285 177 216 1,953 2,165 1,852 155 163 148 -2,460 -2,689 -3,173 - 6,106 - 4,940 - 5,355 2,565 2,804 3,441 484 793 973 227 239 307 1,476 1,393 1,298 126 84 41 -3,814 -4,469 -4,682 - 6,090 - 8,186 - 9,793 Feb. Mar. 1,102 2,436 1,986 540 1,619 583 162 184 134 1,051 1,162 1,314 18 17 32 -4,753 -5,262 -5,030 -10,893 -10,769 -11,058 Apr. May 1,435 408 99 *85 182 154 p 1,736 2,589p -3,952 -3,17 6 p -11,603 - 9 ,159 p 10 17 24 2,264 2,120 1,754 472 263 212 80 -39 226 62 329 139 1,503 1,194 1,816 1,939 48 41 47 54 -4,032 -5,375 -4,739 -2,672 -11,062 -11,470 -12,826 -11,648 1 8 15 22 29 810 616 305 94 333 -15 -17 *384 * 8 * 19 177 213 176 9 7p 108p 2,157 1,617 1,977 3,088p 3,605p 74 82 94 112p 114 p -2,967 -3,423 -4,002 -2,858 -2,447 - * 12 * 76 214p 133p 3,054p 2,729p 131p 136p -3,5 84 p -5,040p - 9,340p -10,41 8 p Jan. Apr May I June 5 12 19 26 NOTE: Total (5) -6,189 -2,447 Dec. ---- Reserves 136 13 May 1974 -- 197 0 Bonds Member Bank Reserve Positions Basic Reserve Deficit Borrowing at FRB** 3,605 776 Low 1974 -- (3) Excess** 394 -83 1974 -- High 1973 -- (2) 1,299 -301 Low Bonds Coupon Issues 3,796 897 1973 -- High Dealer Positions Municipal Corporate * * * *1,031 *1,110 ~--~ - 40 102p 9,712 9,102 9,091 9,329 8,711 " Government security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury bills financed by repurchase agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security dealer positions are debt 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 weeks, except for corporate and municipal issues in syndicate which are Friday figures. * ** STRICTLY OCNFIDENfIAL Monthly averages for rxcess reserves and borrowings are weighted averages of statement week figures. STRICTLY CONFIDENTIAL (FR) JUNE 14, 1974 TABLE 5 SELECTED INTEREST RATES Per cent Period ederal Funds (1) 90-Day 1-Year (3) 8.43 5.42 Long-Term Short-Term 90-119 Day Commercial paper Treasury Bills CD's New Issue-NYC 60-89 Day Aaa Utility New Recently Issue Offered (7) (8) Municipal Bond Buyer U.S. Government (10-yr. Constant Maturity) (10) FNMA Auction Yields (4) (5) 90-119 Day (6) 10.50 5.63 10.50 5.38 10.75 5.50 8.52 7.29 8.30 7.26 5.59 4.99 7 54 6.42 (11) 9.37 7.69 High Low 10.84 5.61 (2) 8.95 5.15 1974 -- High Low 11.60 8.81 8.78 7.04 11.00 7.88 11.00 8.00 11.00 7.88 9.34 8.05 9 15 8.14 6.08 5.16 7.66 6.93 9.54 8.43 1973 -- May June 7.84 8.49 6.36 7.19 7.26 8.00 7.44 7.98 7.41 8.13 7.51 7.64 7.50 7.64 5.15 5.18 6.85 6.90 7.98 8.07 July Aug. Sept. 10.40 10.50 10.78 8.01 9.26 10.26 10.31 9.09 10.25 10.31 9.19 10.40 10.50 8.01 8.36 7.88 7.97 8.22 7.99 5.40 5.48 5.10 7.13 7.40 7.09 8.46 8.83 9.32 Oct. Nov. Dec. 10.01 10.03 9.95 7.22 9.14 9.11 9.28 9.15 9.06 9.44 8.08 8.91 9.13 7.90 7.90 8.00 7.94 7.94 8.04 5.05 5.18 6.79 6.73 6.74 9.01 8.84 8.78 Jan. Peb. Mar. 9.65 8.97 9.35 7.77 7.12 7.97 8.86 9.05 8.09 8.69 8.83 7.97 8.56 8.21 8.12 8 46 8.22 8 23 8.42 5 22 8.00 8.64 5.41 6.99 6.96 7.21 8.71 8.48 8.53 10.51 11.31 8.33 8.23 9.92 10.82 9.81 10.83 9.78 10.90 8,98 9.24 8.94 9.13 5.73 6.02 7.51 7.58 9.07 9.41 3 10 17 24 9.93 10.02 10.36 10.78 8.41 8.60 8.13 7.96 9.45 9.63 9.25 9.75 10.03 9.38 9.75 9.88 10.25 8.78 9.13 8.91 8.98 8.75 8.92 8.95 9.08 5.73 5.75 5.61 5.82 7.47 7.48 7.46 7.58 1 8 15 22 29 11.17 11.29 11.46 10.95 11.54 8.65 10.65 10.98 11.00 10.90 10.41 10.75 11.00 10.88 10.88 10.63 10.75 11.00 11.00 11.00 9.15 9.11 9.13 9.10 9.08 5.91 10.75 9.27 9.27 9.23 9.34 9.09 6.08 7.63 7.66 7.55 7.54 7.51 Tune 5 12 19 26 11.45 11.60 10.70 10.85 10.63 10.75 10.50 10.50 9.23 9.28p 9.14 9.12p 6.01 6.04 7.51 7.48p 1973 -- 1974 -- Apr. May 1974 -- Apr. May --.-- '.-.-. 8.29 7.83 7.45 9.80 8.78 8.15 8.03 7.84 8.03 8.11 9.88 10.25 5.12 '.20 6.00 6.04 6.05 8.95 9 18 9.34 9.48 9.54 / Daily -- June 6 NOTES: 8.67 (9) 11.40 11.70p I- 7.93 8.36 7.50 10.88 11.00 L n.a. A- A I' ~ "' Columns ' and 6 are one-day Wednesday quotes. For columns 7, 8 and 10 Column 9 is a one-day quote for Thursday following the end of the weekly date is the mid-point of the calendar week over which data are averaged. Column 11 gives FNMA auction data for the Monday preceding the end of the statement week. The FNMA auction yield is the the statement week. average yield in the hi-weekly auction for short-term forward commitments for Government underwritten mortgages. Weekly data for columns 1 to 4 are statement week averages of daily data. APPENDIX TABLE I VARIABLES RESERVES ANDMONETARY MONEY STOCK MEASURES RESERVES Total Period (1) Nnborrowed (2) Adjusted Support Pvt. Deposits Credit Proxy 1 2 3 (4) (5) (6) OTHER BANK CREDIT MEASURES Available to (3) June 14, 1974 Total Time Loans and Investments (7) Other than CD's (9) (8) (10) Institution eposits / (11) (Per Cent Annual Rates of Growth) CD's (12) Nondeposit Funds (13) Gov't Demand (14) (Dollar Change in Billions) ( (Series revised) Annually: U.S. Thrift Time Total revised Series 1970 1971 1972 1973 +6.0 +7.2 +10.6 +7.8 +9.3 +7.8 +7.7 +7.2 +8.7 +6.9 +10.1 +9.3 +6.0 +6.3 +8.7 +6.1 +8.4 +11.2 +11.1 +8.9 +8.3 +13.3 +13.0 +8.8 +8.2 +9.4 +11.6 +10.6 +8.1 +11.2 +14.6 +13.5 +17.9 +18.2 +15.7 +16.0 +11.1 +16.7 +13.5 +11.4 +8.0 +17.1 +16.6 +8.6 +14.4 + 7.7 -8.4 -7.6 + -i +10.4 +19.4 +0.4 +3.0 - 1st Half 1972 26d Half 1972 +10.8 +9.9 +11.0 +4.1 +8.3 +11.5 +7.7 +9.4 +10.7 +10.9 +12.4 +12.8 +11.2 +11.3 +13.6 +14.7 +15.4 +14.8 +13.8 +12.3 +15.7 +16.3 +4.4 +6.0 -0.2 +0.6 + 1st Half 1973 2nd Half 1973 +6.7 +8.6 +1.6 +12.7 +10.3 +7.8 +13.8 +7.0 +16.6 + 9.6 +20.8 +10.2 +10.4 +11.8 +10.7 +6.1 +18.6 + 0.8 +1.2 +1.8 -I -I Quar&erly: 1st Qtr. 1972 2nd Qtr. 1972 3rd Qtr. 1972 4th Qtr. 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 +13.5 +11.0 +13.3 +12.0 +10.5 +11.6 +10.2 +12.1 +15.7 +11.1 +13.0 +15.8 +14.5 +15.7 +14.3 +14.8 +15.5 +11.7 +12.7 +11.4 +15.9 +14.9 +17.8 +14.2 +0.7 +3.7 -0.3 +0.1 -I +2.4 +0.3 +3.6 +0.3 + 1st 2nd 3rd 4th +6.4 +6.9 +10.6 +6.1 -3.6 +7.0 +11.3 +13.4 +7.8 +12.5 +14.2 +1.4 +8.6 +10.6 +5.1 +9.8 +14.6 +12.6 +10.5 +3.3 +19.9 +12.7 +12.7 + 6.3 +22.7 +17.8 +14.0 +6.1 + 9.9 +10.6 +10.6 +12.6 +11.4 +9.7 +4.6 + 7.6 +11.2 +7.4 +4.7 -3.9 +0.5 +0.7 +1.7 +0.1 + -: -I - +9.4 +8.5 +15.9 +15.6 +12.5 +8.6 +13.7 +11.6 +8.7 +9.0 +9.4 +10.4 +7.3 +2.3 +4.2 +6.8 +7.2 +8.6 + 1.3 +8.6 +7.8 +9.2 +6.6 +2.5 Qtr. Qtr. Qtr. Qtr. 1973 1973 1973 1973 1st Qtr. 1974 +1.7 +1.5 +6.2 +9.7 +7.5 Monthly: 1973--Jan. Feb. Mar. Apr. May June July Aug. Sept. det. Nov. Dec. +30.1 -21.1 +10.5 +14.7 +5.4 +0.5 +27.2 -5.1 +9.4 +12.1 -4.3 +10.5 +26.8 -38.5 +1.8 +20.1 +0.5 +0.2 +24.9 -13.5 +21.9 +26.7 -1.6 +14.4 +15.9 -2.9 +10.3 +10.0 +9.9 +17.3 +18.5 +10.1 +13.3 +1.0 -6.3 +9.4 +10.8 +8.1 +6.6 +8.6 +10.9 +11.9 +6.3 +5.0 +3.9 +9.3 +10.1 +9.6 +9.7 +11.1 +22.3 +15.4 +11.0 +11.1 +8.6 +17.0 +5.7 +1.6 +2.7 +5.6 +17.8 +23.7 +17.2 +13.1 +16.6 +8.2 +14.5 +18.2 + 5.2 + 7.7 + 7.4 + 3.6 +16.5 +22.3 +28.2 +22.5 +18.8 +11.2 +12.8 +18.9 + 9.8 + 3.7 + 3.3 +11.3 +12.9 + 7.0 + 9.6 +10.0 +10.8 +10.7 + 7.6 +13.0 +10.8 +16.1 +11.4 +10.1 1974--Jan. Feb. Mar. April May p +35.7 -24.8 -5.4 +32.7 +20.0 +45.9 -30.4 -10.0 +19.0 -9.0 +6.9 -0.3 +11.9 +19.7 +20.9 +7.5 +11.5 +9.0 +7.6 +4.4 +12.5 +1.3 +11.3 +31.6 +16.8 +14.7 +15.5 +16.8 +21.8 +15.2 +9.3 +30.8 +22.9 +16.0 +14.2 +7.0 +8.1 +5.8 +16. Y +10.2 44.9 +1.2 +0.6 + + 4.4 -0.5 -1 + 5.5 +0.4 + + 3.8 +0.2 -i + 2.9 + 0.7 +0.3 +0.2 + + 1.9 +0.9 + 2.4 + 0.4 +0.6 +0.2 + + - 2.9 - 1.8 + 0.8 -0.4 40.2 +0.3 + -I -i 42.7 +0.1 + +1.1 +0.2 - +1.1 +0.9 + +7.7 +5.8 +1.0 +1.1 + -i I Growth rates are based on estimated monthly average levels derived by averaging end of current month and end of previous month reported data. NOTE: Reserve Requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. p - Preliminary. APPENDIX TABLE II June 14, 1974 RESERVES ANDMONETARY VARIABLES (Seasonally adjusted, billions of dollars) __RESERVES - I Period - - lotal i (1) Nonorrowed (2) Available to Support i Pv. uposla (3) __ I Total (4) (5) M2 (6) M3 (7) I rrox r OTHER_ (9) Total Time T, (10) mvavsme it. Time Thrift Other Institution than CD's Denositsll De osit., I CD* th (11) I (12) Series revised) 203.9 217.5 237.9 254.8 269.9 297.2 438.5 487.6 559.0 229.2 270.9 313.3 199.6 200.4 200.1 529.6 532.4 534.7 830.2 835.8 940.4 409.7 413.5 421.2 567.3 578.5 586.8 317.6 323.6 331.2 272.9 274.5 276.6 259.4 262.4 265.5 200.8 203.4 206.2 538.4 543.7 549.5 846.4 854.1 862.6 426.6 430.5 434.5 593.2 601.4 605.5 337.4 342.7 345.9 31,358 32.038 32,394 266.4 266.3 265.5 206.9 206.4 205.3 952.1 555.1 556.8 867.1 870.7 873.5 437.6 443.8 445.9 612.8 622.1 624.8 33,466 33,463 33,807 32,845 32,714 32,912 266.6 269.2 271.4 206.1 208.2 209.7 561.9 567.3 572.1 880.3 887.7 894.8 446.5 447.5 449.6 35,850 35,108 34,949 35,902 36,500 34,799 33,916 34,166 33,910 32,799 32,791 33,117 33,660 34,246 270.8 273.7 276.2 278.1 279.3 208.9 211.1 212.9 214.1 214.8 575.4 581.9 586.2 590.2 592.9 900.4 909.0 915.8 921.6 925.0 454.3 454.8 459.1 471.2 477.8 3 10 17 24 35,398 35,040 36,161 36,003 33,895 33,846 34,345 34,064 33,240 33,117 33,794 33,722 277.5 277.7 280.1 277.8 214.1 213.6 216.0 213.9 588.1 589.3 592.3 590.2 1 8 15 22 9 2 p 36,742 36,385 36,572 36,628 36,376 34,585 34.768 34,595 33,540 32,771 34,277 34,151 34,104 34,218 34,363 276.8 278.6 279.5 280.6 278.1 213.0 214.1 215.1 216.0 213.5 5p 36,515 33,461 34,743 281.0 216.4 27,099 29,965 29,053 221.2 235.2 255.7 1973--Jan. Feb. Mar. 32.199 31,634 31,910 31,017 30.040 10,089 29,439 29,368 29,621 256.7 257.9 258.1 Apr. May June 32,300 32,445 32,459 10,589 30,602 30,608 29,867 30,114 30,548 July Aug. Sept. 33,576 33,906 34,173 31,622 11,741 32,321 Oct. Nov. Dec. 34,942 34,857 35,105 1974--Jan. Feb. Mar. April May 1/ I Pyt, Dep. Total Loans & 332.9 364.3 406.4 28,861 31,173 30,160 June MX Adjusted Credit 642.7 727.9 822.8 29,193 31,299 31,410 May BANK CREDIT MEASURES (Series revised) 425.2 172.2 182.6 473.0 525.5 198.7 ANNUALLY: 1970 Dec. Dec. 1971 1972 Dec. Wb .Y: 1974--April MONEYSTOCK MEASURES 33,634 CD'^I a (13) NonDeposits I F.~Jj u[ s U I (14) 25.3 33.0 43.4 11.6 300.6 303.5 305.7 44.7 49.1 54.6 5.0 4.5 4.9 278.9 281.4 283.9 308.0 310.4 313.1 58.4 61.3 62.0 5.1 5.4 5.6 349.6 355.1 358.0 285.7 288.8 291.4 315.0 315.6 316.7 63.9 66.3 66.7 6.5 7.1 7.3 628.8 632.7 634.6 359.1 360.1 363.5 295.3 298.1 300.6 318.5 320.4 322.7 63.8 62.0 62.8 6.9 7.1 7.4 642.4 650.7 659.8 668.6 674.3 370.1 374.8 377.7 387.4 394.8 304.6 308.2 310.0 312.1 313.6 325.0 327.1 329.6 331.4 332.1 65.5 66.6 67.7 75.4 81.2 7.5 7.7 8.6 9.6 10.7 466.3 468.4 472.9 471.8 382.0 385.4 387.0 389. ? 310.5 311.5 312.2 312.3 71.5 73.9 74.8 76.9 9.5 9.3 9.4 9.7 589.6 591.3 593.1 593.8 592.7 473.8 476.4 476.6 478.5 478.5 390.8 392.4 394.2 395.2 397. 1 312.8 312.7 313.6 313.3 314.6 78.0 7° 7 80.6 82.0 82.5 10.2 10.4 10.8 11.1 11.0 596.5 482.0 397.7 315.6 82.2 10.6 U.S. Gov't D mIn t-H emn S (15) 4.0 4.4 Eatimated monthly average levels derived by averaging end of current month and end of previous tmonth reported data. p - Preliminary. NOTE: Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related coamercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related coemercial paper and Eurodollar borrowings of U.S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily averages except for nonbank commercial paper figures which are for last day of month. Weekly data are not available for M3, total loans and investments and thrift institution deposits. Appendix Table III Growth Rate in Money Supply (Per cent change at an annual rate) M1 M3 M Q M Q M Q I 9.0 5.3 12.3 11.0 13.5 12.5 II 6.2 8.2 8.9 9.8 11.0 11.7 III 8.7 8.2 10.8 10.8 13.3 13.0 IV 9.9 8.4 10.6 10.2 12.0 12.2 I 3.8 7.0 8.6 10.2 1972 1973 II 11.5 III 1974 M2 7.0 8.8 7.5 11.1 8.8 10.6 9.0 5.6 5.3 7.9 5.1 7.5 IV 8.9 4.5 11.0 8.9 9.8 7.9 I 7.1 6.7 9.9 9.9 9.4 9.4 lie 7.2 8.6 7.8 8.5 6.6 7.7 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. e = Estimated. Appendix Table IV Growth Rates in Money Supply for Alternatives M1 M M3 M2 _ M Q M _ Alt. A 1974 III IV III & IV Combined 6.1 7.5 6.8 6.6 6.8 6.7 7.4 8.7 8.0 7.7 8.2 7.4 6.4 7.2 6.8 6.4 7.0 6.6 5.5 5.6 5.5 5.8 5.5 5.6 4.6 4.2 5.2 4.4 4.4 4.8 Alt. B 1974 III IV III & IV Combined 5.3 6.3 5.8 6.0 5.6 5.8 6.6 7.0 6.8 Alt. 1974 III IV III & IV Combined 4.6 4.9 4.7 5.4 4.5 4.9 5.4 5.0 5.2 7.1 6.8 6.9 C 6.4 5.1 5.7 M = Annual rates of growth calculated from average levels in last months of the quarters. Q = Annual rates calculated from average levels in all three months of the quarters. Appendix Table V Money Supply Growth Rates M1 1973 M 1 less Foreign Official Deposits and Deposits due to Foreign Commercial Banks January 4.7 5.2 5.3 February 5.6 5.6 6.7 March 0.9 0.5 0.9 April 6.0 6.5 6.6 May 13.9 13.0 11.8 June 14.2 14.7 14.4 July 4.1 3.6 August -0.5 -0.5 September -3.6 -3.6 -3.7 5.0 5.5 4.6 October 1974 M1 less Foreign Official Deposits 2.8 10.1 November 11.7 December 9.8 9.9 8.2 January -2.7 -2.7 -3.6 February 12.9 12.5 13.1 March 11.0 11.9 11.2 April 8.3 5.7 5.8 May 5.2 7.0 6.2 10.9 

Federal Reserve (1974, June 17). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19740618

@misc{wtfs_bluebook_19740618,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1974},
  month = {Jun},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19740618},
  note = {Retrieved via When the Fed Speaks corpus}
}