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 this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. 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 optimal 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. Strictly Confidential (FR) Class I FOMC March 27, 1981 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the staff Board of Governors of the Federal Reserve System STRICTLY CONFIDENTIAL CLASS I - FOMC March 27, 1981 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Abstracting from the effect of nationwide NOW accounts, the decline of transactions balances that characterized the November to February period appears to have been reversed most recently, with adjusted M-1B estimated to increase at about an 8-3/4 percent annual rate in March, as shown in the table below. Nonetheless, M-1B's growth over the first three months of the year remains about 2-1/4 percentage points below the Committee's target for that period. The weakness in M-1B is significantly greater than predicted by the Board's quarterly econometric model as well as other models, given actual interest rates and nominal GNP. On a quarterly average basis, adjusted M-1B increasedat only about a 1/2 percent annual rate, and the income velocity of this aggregate rose at an annual rate of almost 14-1/2 percent--a record for the period since the Korean war. Monetary Aggregates Seasonally Adjusted Annual Growth Rates First Quarter 1981 M-1B Actual Adjusted 1/ Jan. Feb. 12.2 2.9 3.5 -2.0 March * 12.4 8.7 QIV '80QI '81 9.3 3.2 5.2 0.4 5.5 Target M-2 Actual Target Dec.March * 5.7 7.6 16.5 10.0 8.0 7.0 * Partially projected. from the estimated impact of shifts from savings accounts Abstracting 1/ than demand deposits to NOW accounts. other and assets -2It is possible that the demand for money shifted downwards in response to extraordinarily high levels of interest rates in the fourth quarter and the introduction of nationwide NOW accounts in the first, both of which could have induced the public to review more intensively its cash management techniques. (2) In contrast to adjusted M-1B, the growth of M-2 is expected to expand about 2 percentage points above the Committee's December to March short-run target. The nontransactions component of M-2 was buoyed by record growth in money market mutual funds (MMMFs), more than offsetting the greater than expected weakness in small time and savings deposits. In March, the level of M-2 was at the upper end of the Committee's longer-run range. (3) Banks' issuance of large CDs slowed in February and amounts outstanding have been declining in March as business short-term credit demands at domestic offices of U.S. banks ebbed. The expansion in total commercial bank credit moderated considerably in February, and available data suggest further weakening in March. Growth of large CDs at S&Ls also slowed in the early months of 1981, even as other deposits weakened, probably reflecting adverse publicity regarding their earnings problems 1/ Despite the recent weakness in CDs, M-3 expanded at about a 10-1/4 percent annual rate over the first three months of the year, placing the level of M-3 in March just above the upper end of the Committee's longer-run range. (4) Demand for total reserves weakened in February and the first weeks of March in response to slow growth in reservable deposits and a drop in excess reserves to more normal levels following a sustained period in 1/ In early March, five large S&Ls had their commercial paper ratings downgraded by rating agencies, and investors became more cautious about uninsured liabilities of thrifts. which they had been unusually high, presumably in response to the Monetary Control Act. Borrowing in the first two full weeks in February dropped to $1.1 billion, below the initial assumption of $1.3 billion used in constructing the nonborrowed path, and the funds rate began declining from the over 17 percent level of early February. By the latter part of February the funds rate had moved to around the lower end of the 15 to 20 percent range specified by the Committee. In a telephone conference on February 24, the Committee agreed to accept some shortfall in the narrow aggregates as consistent with its objectives for the year, resulting in a reduction in nonborrowed reserve targets in the latter part of February and early March that was expected to keep borrowing at the discount window from declining.1/ This path adjustment contributed to a decline in nonborrowed reserves in February roughly in line with the decline in total reserves, as shown in the table below. In March nonborrowed reserve growth surged, and borrowings and Reserve Aggregates (Seasonally Adjusted Annual Rate of Growth) Jan. Feb. March 2/ 8.2 -12.4 22.6 Total Reserves -1.0 -14.7 10.9 Monetary Base 2.7 2.3 7.2 1,303 183 941 299 Nonborrowed Reserves Memo: ($ mils., n.s.a.) Average level of: Adjustment borrowing Excess reserves 1,347 544 See Appendix I for all adjustments made to reserve paths during the intermeeting period. 2/ March data are estimated for the period after March 25. 1/ the funds rate declined on average from February levels. The federal funds rate averaged around 13-3/4 percent over the past two statement weeks, but trading most recently has been in a 14-1/2 to 15-1/2 percent range. (5) Private short-term interest rates have fallen 2 to 3-1/2 percentage points on balance since the early February Committee meeting, and with these further declines some are more than 7 percentage points below their In the Treasury bill market, yields have fallen less--3/4 to December peaks. 2 percentage points since the last meeting and 2 to 4 percentage points since December-as the Treasury has continued to borrow heavily in the bill market. In February and March, the Treasury raised more than $20 billion in new money in bill auctions, including $13 billion in cash management bills maturing in the second quarter. The bank prime rate was lowered in steps from 19-1/2 percent at the beginning of February to 17 to 17-1/2 percent. (6) In contrast to short-term rates, bond yields have risen on balance since early February-by roughly 30 basis points in the case of Treasury securities. The Treasury has raised almost $11 billion in note and bond sales since the mid-quarter financing and next week will auction a $2-3/4 billion 7-year note. relatively large. Public issuance of corporate bonds has remained During the intermeeting period, the average commitment rate on new fixed-rate mortgages at S&Ls rose further to 15.40 percent. (7) The dollar has fluctuated over a wide range on exchange markets during the past several weeks, responding primarily to the relative movement of U.S. and foreign interest rates and to tensions in Eastern Europe. On balance, the weighted average exchange value of the dollar has risen 2 percent since the February Committee meeting. -5- The U.S. authorities have purchased about $3/4 billion equivalent of foreign currencies. (8) The table on the next page shows seasonally adjusted annual rates of change, in percent, for selected monetary and financial flows over various time periods. M-1A and M-1B data in parentheses are adjusted for the estimated impact of nationwide NOW accounts. 1/ 1980---- 1978- 197 / 1979- Nonborrowed reserves 6.3 0.3 7.8 Total reserves 6.2 2.6 7.1 Monetary base 9.2 7.8 8.8 7.4 5.0 5.0 Mar. '81 over Dec. '80 --- Mar. '81 over Feb. '81 ---- 6.1 22.6 -1.6 4.1 10.9 7.2 Concepts of Money M-1A (Currency plus demand deposits) 2/ -20.7 (2.7);' -3.6 (8.7)- M-1B (M-lA plus other checkable 8.2 deposits) M-2 (M-1B plus small time and savings deposits, money market mutual fund shares and overnight RP's and Eurodollars) M-3 (M-2 plus large time deposits and term RP's) 7.7 7.3 9.3 5/ (3.2)- 12.4 (8.7)' 9.0 9.8 10.0 16.5 11.3 9.8 9.9 10.3 9.2 13.4 12.6 8.4 Bank Credit Loans and investments of all commercial banks 3/ 8.0 7.3 p -2.8 p 1.8 5.1 -2.6 Managed Liabilities of Banks (Monthly average change in billions) Large time deposits 4.2 1.6 0.6 1.4 2.1 1.3 Net borrowing from own foreign branches Other borrowins 4 / "1.3 -2.0 -3.2 p -4,7 p n.a. n.a. n.a. 1/ QIV to QIV. 2/ Other than interbank and U.S. Government. 3/ Includes loans sold to affiliates and branches. 4/ Primarily federal funds purchases and securities sold under agreements to repurchase. 5/ Adjusted for nationwide NOW accounts. p Preliminary estimate. n.a. Not available. 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 Wednesday statement date 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) Shown below for Committee consideration are three alternative policy strategies for the second quarter. Since March data for the aggregates are still partially estimated, the alternatives are specified in terms of the four-month February to June period (with implied growth rates for March to June also shown based on the currently projected March levels). The M-1B growth targets abstract from the estimated impact of nationwide NOW accounts, as does the Committee's longer-run target. (More detailed and longer-run data for the aggregates, on both an adjusted and unadjusted basis, including those for M-1A, are shown in the tables on pp. 8 and 9.) The last line of the table indicates federal funds rate ranges thought by the staff to be consistent with the three alternatives. Growth from February to June M-1B M-2 Implied growth from March to June M-1B M-2 Intermeeting federal funds rate range (10) Alt. A Alt. B Alt. C 8-3/4 12-3/4 6-3/4 12-1/4 5-1/2 12 6 8-3/4 4-1/2 11-1/2 10-3/4 10-1/4 13 to 19 14 to 20 15 to 21 As shown in the first chart on the following pages, the alternative A target specifications are designed to return adjusted M-1B by June to the midpoint growth path of the Committee's QIV '80 to QIV '81 longer-run range of 3-1/2 to 6 percent. Alternative B specifies slower growth in M-1B that would carry it only to the lower end of the Committee's longer-run range by June but, assuming a continuation of that growth rate, to the midpoint of the longer-run range by September. Under either of these Chart 1 CONFIDENTIAL (FR) Class II-FOMC Actual and Targeted M-1B M1-B - Billions of dollars -460 Observed Level Level Adjusted for Impact of Nationwide NOW Accounts * * * Short-Run Alternatives .... 6% -- 430 -. -1420 -- 410 I O I N 1980 1 D I I j F I M I A 1 I M I J 1981 I A I S I 0 N D CONFIDENTIAL (FR) Class II-FOMC Chart 2 Actual and Targeted M-2 M-2 Billions of dollars -11840 Actual Level SShort-Run Alternatives C1 1820 9% -1800 -- 1780 1760 1740 7 -- 1720 -41700 1' I 1 / / II /7 I • O N O 1980 I J ! F M I A I I I M I lI J I 1981 J I A I S .I I I O N - 1680 - 1660 1640 0 Chart 3 CONFIDENTIAL (FR) Class II-FOMC M-3 and Bank Credit M-3 Billions of dollars 2150 Actual Level - S* Short-Run Alternatives 2100 -- 61 2% 2050 2000 ' ,00010 -41950 * j 0 I N I D I J I F I Note: A.8, and C alternatives are indistinguisnable on this scale. I A M 1 I J M 1980 I I A J I I S 1 N O *4 ul nnf II I~uv 0 1981 BANK CREDIT r Billions of dollars -1350 - Actual Level -- 11300 -1250 I SI O N 1980 0 J I I F IL I I II M I I I A I II II I I I I I I A M 1981 I I m S 0 I N 1200 12 0 0 0 Alternative Levels and Growth Rates for Key Monetary Aggregates M-1A 1981--February March April May June M-IB Alt. A Alt. B Alt. C 384.6 384.6 387.4 389.3 391.2 393.1 384.6 387.4 388.7 390.1 391.5 387.4 390.2 393.1 396.0 Alt. A Alt. B Alt. C 412.2 415.2 418.1 421.2 424.3 412.2 415.2 417.2 419.3 421.4 412.2 415.2 416.6 418.2 419.8 Growth Rates Monthly 1981--April May June February '81 June '81 8.7 (1.6) 8.9 (5.2) 8.9 (6.5) 5.9 (-1.3) 5.9 (2.0) 5.8 (3.3) 4.0 (-3.3) 4.3 (0.3) 4.3 (1.6) 8.7 (10.5) 8.9 5.8 (7.7) 6.0 (10.2) (7.4) 8.8 (10.0) (7.0) 8.9 (2.5) 6.6 (0.1) 5.4 (-1.2) 8.8 (10.9) (8.7) 8.9 (4.5) 5.9 (1.3) 4.2 (-0.4) (10.1) (7.4) 4.4 (6.0) -0.6 7.5 -0.6 5.5 -0.6 4.4 0.4 7.5 0.4 5.7 0.4 4.6 6.0 6.7 4.3 (6.3) 4.6 (5.9) 4.6 (5.6) 5.5 (7.5) March '81 - June '81 8.8 6.0 Quarterly Average 1981--QI QII NOTE: Growth rates shown in parentheses are for the observed levels of the aggregates. Alternative Levels and Growth Rates for Key Monetary Aggregates (cont'd) M-3 M-2 Alt. A Alt. B Alt. C Alt. 1692.0 1715.2 1731.2 1748.6 1764.1 1692.0 1715.2 1730.3 1746.7 1761.1 1692.0 1715.2 1729.7 1745.6 1759.5 1993.3 2008.5 2020.8 2037.3 2054.8 1993.3 2008.5 2020.3 2036.3 2053.1 1993.3 2008.5 2019.7 2035.0 2050.9 1981--April May June 11.2 12.1 10.6 10.6 11.4 9.9 10.1 11.0 9.6 7.3 9.8 10.3 7.1 9.5 9.9 6.7 9.1 9.4 February '81 June '81 12.8 12.3 12.0 9.3 9.0 8.7 March '81 June '81 11.4 10.7 10.3 9.2 8.9 8.4 7.0 12.2 7.0 11.7 7.0 11.5 1981--February March April May June A Alt. B Alt. C Growth Rates Monthly Quarterly Average 1981--QI QII 10.6 8.8 10.6 8.6 10.6 8.3 -10- alternatives M-2 would probably be above the upper end of its range in June, and might well remain above the range over the balance of the year (assuming M-1B growth at its midpoint rate for the year as a whole). Alternative C is designed to increase the odds of constraining M-2 growth to within its longer-run range for 1981. This would appear to involve growth in M-1B. for the year at the lower end of its longer-run range, and alternative C specifies such a trajectory for M-1B. The three strategies thus not only imply options for how rapidly the Committee wishes to target a return of M-1B to within its longer-run range, but also for the weight it wishes to place on obtaining an M-2 growth within its own longer-run range. (11) Demands for transactions balances are likely to expand rapidly over the second quarter as a whole. Although real GNP in that quarter is projected to show no change, nominal spending is expected to increase rather rapidly, and the staff does not anticipate that the sharp downward shift in money demand of the first quarter will be repeated in the second. The resulting anticipated strengthening of M-1B will contribute to a rapid growth in M-2. Though the expansion of the nontransaction component of M-2 is expected to slow from its exceptionally strong March pace, it will probably be faster on average over the next three months than in the first quarter. (12) The projected strengthening of demand for transactions balances implies that interest rates will probably be under upward pressure over the coming quarter, particularly under the alternative B and C specifications, but also possibly to a degree under alternative A. Under alternative A--which involves growth in total reserves from March to June -11- at a 9-3/4 percent annual rate-we would expect the funds rate to be in a 14 to 16 percent range over the next few-weeks, with borrowing at the discount window ranging around $1 billion, given the current discount rate structure. Many market participants appear to be expecting rate declines in the months ahead. For example, in the futures market, 3-month bills for June delivery are quoted at 11-7/8 percent, as compared to the current cash market quote of around 13 percent. Against this backdrop, a failure of the funds rate to decline from current levels would tend to exert upward pressure on short-term interest rates generally. Of course, if money demand tends to be on the weak side this spring-as could well develop if the economy is even less strong than projected-lower funds rates, borrowing, and market rates generally would occur. (13) Whatever upward interest pressures develop over the months ahead are likely to be mainly the product of constraints on money growth relative to demand. In the credit markets themselves, funds raised are expected to drop in the second quarter. This reflects a greater than seasonal decline in Treasury borrowing, as the combined Federal budget moves from a $37 billion deficit in the first quarter to an $11 billion surplus in the second. In the projected interest rate environment, corporate and tax-exempt bond offerings are unlikely to rise further over the spring months, although business demands on banks will probably pick up from the recent depressed pace. (14) Greater restraint on money growth relative to demand would be imposed under alternatives B and C, which involve limiting growth in adjusted M-1B to rates of 6 and 4-1/2 percent, respectively, over the next three months-substantially lower rates than the 8-3/4 percent of alternative A. Growth in total reserves over the period would be at annual rates of -12- 7-3/4 and 6 percent under alternatives B and C, respectively. A federal funds rate in the area of 15 to 17 percent, or somewhat higher, might emerge over the next few weeks under alternative B1/. would develop under alternative C. Still greater rate pressures Borrowing at the discount window might be around $1-1/2 billion under B and, of course, higher under C. The upward response of market interest rates, particularly short-term rates, to the increased pressures on bank reserve positions of alternatives B and C may be quite marked over the period ahead. Any rise in long-term rates, though, might be muted as corporate borrowers back away from the market in anticipation of lower rates later. (15) From the perspective of the year as a whole, the degree of rate pressure we would foresee over the next several months under alternative C, which is consistent with a strategy of lowering M-1B growth for the year to the bottom of its range, would be likely to weaken the outlook for GNP relative to the current staff forecast (which is based on alternative B). As a result, this alternative carries with it a potential for a drop-off of interest rates from peak levels later in the year, in response to a pronounced cyclical weakening of the economy. By year-end interest rates under alternative C thus could be lower than under alternative B. (16) Under any of the alternatives presented, the interest rate outlook suggests continued substantial earnings pressures on thrift institutions over the next few months. Thrifts are likely to continue employing funds to a great extent to acquire short-term assets both to bolster liquidity and to add to the average return on their assets. They probably would continue to be reluctant lenders in the mortgage market. 1/ See Appendix II for interest rate projections for 1981 under alternative B. -13Directive language (17) Given below is a suggested operational paragraph for the directive consistent with the form of the directive adopted at the meeting in early February. Because monetary aggregates data for the second half of March are projected, the language calls for expansion of reserve aggregates at a pace consistent with the desired rates of monetary growth over the four months from February to June. The associated monetary growth rates on a quarterly average basis are from the fourth quarter of 1980 to the second quarter of 1981. The specifications adopted at the early February meeting are shown in strike-through form. For simplification, the Committee may wish to consider not including M-1A in the directive, as is shown with strike-through in the paragraph below. In the short-run the Committee seeks behavior of reserve M-1A aggregates consistent with growth in[DEL: and]M-1B AND M-2 from 5-to-6] March] JUNE at annual rates of ABOUT [DE: [DEL: December] FEBRUARY to [DEL: ____percent, RESPECT8] in M-2 at a rate ofabout ____ percent and [DEL: abstracting from] AFTER ALLOWANCE FOR the impact of flows into IVELY, [DEL: NOW accounts. M-1A,]M-1B, These rates are associated with growth of [DEL: the first quarter] THE and M-2 from the fourth quarter of 1980 to[DEL: 2-3/4] percent 2 SECOND QUARTER OF 1981 at annual rates of about [DEL: 7]____ percent, respectively. ____ percent, and[DEL: It is recognized that shifts into NOW accounts will continue to distort measured growth in [DEL: M-1A-and]M-1B to an unpredictable extent, and operational reserve paths will be developed in the light of evaluation of those distortions. If it appears during the period before the next meeting that fluctuations in the federal funds rate, taken over a period -14[DEL: 15 20]____ of time, within a range of to TO ____ percent are likely to be inconsistent with the monetary and related reserve paths, the Manager for Domestic Operations is promptly to notify the Chairman, who will then decide whether the situation calls for supplementary instructions from the Committee. APPENDIX I RESERVE TARGETS AND RELATED MEASURES Intermeeting Period ($ millions, not seasonally adjusted) Targets for 4-week average Feb. 11 to March 4 NonTotal borrowed Reserves Reserves (2) (1) Projection of 4-week average Feb. 11 to March 4 Total Reserves (3) Required Excess Reserves (4) Reserves (5) 39,396 38,996 400 1,300 39,627 39,227 400 1,131 2/ / 39,671 39,313 358 973 39,622 39,313 309 1,115 Adjustment Borrowin (3) - (2) As of February 4 (FOMC Meeting) 39,396 38,096 February 6 39,796-1 38,496- February 13 39,998 February 20 33/ 39,973-/ / 38,507=' February 27 39,973 38,259- 39,489 39,34Z 147 1,230 Actual 4-week Avg. 39,592 38,292 39,592 39,342 250 1,300 2/ / 38,69 / 4/ Projection of 4-week average March 11 to Aoril I Targets for 4-week average March 11 to April 1 As of March 6 40,3005/ 39,000 -/ 39,819 39,419 400 March 13 40,135- / 38,83561 39,663 39,323 340 / 7001 7/ March 20 40,010- 38,710- 39,661 39,400 261 March 27 40,010 38,710 39,608 39,366 242 Actual 4-week Avg. 3 9 ,60 8 e 38,710e 39,608 e 39,366 a 24 2 e 1/ 2/ 3/ 4/ 5/ 6/ 7/ 898 e Total and nonborrowed reserves paths adjusted upward by $400 million due to multiplier changes. Total and nonborrowed reserves paths adjusted upward by $202 million to reflect planned phase-in of reserve requirements on foreign-related institutions. Total and nonborrowed reserves paths adjusted downward by $25 million due to weaker than expected demand for excess reserves. In addition, the nonborrowed path adjusted downward further by $166 million in line with FOMC telephone consultation of February 24. Nonborrowed reserves path adjusted downward by $248 million also in connection with earlier consultation. Total and nonborrowed reserves paths adjusted upward by $78 million due to multiplier changes. Total and nonborrowed reserves paths adjusted downward by $165 million due to multiplier changes. Total and nonborrowed reserves paths adjusted downward by $125 million due to multiplier changes. Appendix II INTEREST RATES THOUGHT CONSISTENT WITH GREENBOOK GNP FORECAST AND BLUEBOOK ALTERNATIVE B 1/ (Quarterly averages, percent) Federal funds 1981--1 II III IV 16-7/8 16% 18 19 3-month Treasury bill 14k 14 16 17 Aaa-Utility bond 14 14-5/8 14% 14% Mortgage Commitment 15-1/8 15% 15-5/8 15% 1/ Assumes that M-1B grows 4% percent, abstracting from the impact of nationwide NOW accounts, from the fourth quarter of 1980 to the fourth quarter of 1981. TABLE 1 SELECTED INTEREST RATES (Percent) e dr i o funds Market 1-yr. 3-mo. (1) Short-term CDs Secondary Auction Market 6-mo 3-mo Treasury Bills (2) (3) (4) (5) STRICTLY CONFIDENTIAL CLASS II - FOMC March 30, 1981 Longf U.S. Govt. Constant Maturity Yields Comm. Paper 3-mo,. Bank Prime Rate 3-yr. (6) (7) (8) 10-yr. 30-yr. (9) (10) Corp. Ana Utility New Recently Issue Offered (11) (12) em Municipal Bond Buyer (13) (FR) home Mortgages Primary Secondary tarker Conv. FNMA CGKA Auc. Sec. (14) (15) (16) 1979--High Low 15.61 9.93 12.60 8.85 11.89 8.64 12.65 8.87 14.53 9.84 14.26 9.66 15.75 t1.50 11.68 8.76 10.87 8.79 10.42 8.82 11.50 9.40 11.45 9.39 7.38 6.08 12.90 10.38 13.29 10.42 11.77 9.51 1980--(lgh Low 19.83 8.68 16.73 6.49 14.39 7.18 15.70 6.66 20.58 8.17 19.74 7.97 21.50 11.00 14.29 8.61 13.36 9.51 12.91 9.54 14.51 10.53 15.03 10.79 10.56 7.11 16.35 12.18 15.93 12.28 14.17 10.73 1980--Feb. Mar. 14.13 17.19 12.86 15.20 12.46 14.03 12.72 15.10 14.30 17.57 13.78 16.81 15.63 18.31 12.84 14.05 12.41 12.75 12.13 12.34 13.57 14.00 13.35 13.90 8.16 9.17 13.03 15.28 14.49 15.64 13.16 13.79 Apr. May June 17.61 10.98 9.47 13.20 8.58 7.07 11.97 8.66 7.54 13.62 9.15 7.22 16.14 9.79 8.49 15.78 9.49 8.27 19.77 16.57 12.63 12.02 9.44 8.92 11.47 10.18 9.70 11.40 10.36 9.81 12.90 11.53 10.96 12.91 11.64 11.00 8.63 7.59 7.63 16.33 14.26 12.71 14.61 12.88 12.35 12.64 11.30 11.07 July Aug. Sept. 9.03 9.61 10.87 8.06 9.13 10.27 8.00 9.39 10.48 8.10 9.44 10.55 8.65 9.91 11.29 8.41 9.57 10.97 11.48 11.12 12.23 9.27 10.63 11.57 10.25 11.10 11.51 10.24 11.00 11.34 11.60 12.32 12.74 11.41 12.31 12.72 8.12 8.67 8.94 12.19 12.56 13.20 12.66 13.92 14.77 11.53 12.34 12.84 Oct. 12.81 Nov. Dec. 15.85 18.90 11.62 13.73 15.49 11.30 12.66 13.23 11.57 13.61 14.77 12.94 15.68 18.65 12.52 15.18 18.07 13.79 16.06 20.35 12.01 13.31 13.65 11.75 12.68 12.84 11.59 12.37 12.40 13.18 13.85 14.51 13.13 13.91 14.38 9.11 9.56 10.11 13.79 14.21 14.79 14.95 15.53 15.21 12.91 13.55 13.62 1981--Jan. Feb. 19.08 15.93 15.02 14.79 12.62 12.99 13.88 14.13 17.19 16.14 16.58 15.49 20.16 19.43 13.01 13.65 12.57 13.19 12.14 12.80 14.12 14.90 14.17 14,58 9.66 10.10 14.90 15.13 14.87 15.24 13.55 14.13 1981--Jan. 7 14 21 28 20.06 19.64 19.35 18.12 14.06 15.10 15.44 15.41 12.15 12.56 12.77 12.90 13.18 14.23 14.47 14.12 16.34 17.19 17.74 17.47 15.63 16.69 17.17 16.84 20.64 20.07 20.00 20.00 12.55 12.98 13.12 13.26 12.27 12.49 12.61 12.78 11.81 12.05 12.21 12.35 14.05 14.07 14.29 14.06 14.10 14.17 14.33 14.08 9.49 9.57 9.68 9.91 14.80 14.85 14.85 15.07 14.89 13.18 13.50 13.62 13.71 4 11 18 25 17.19 16.51 15.81 14.96 14.78 15.32 15.22 14.23 12.71 13.10 13.32 12.81 13.74 14.43 14.76 13.61 16.55 16.50 16.82 15.52 15.98 15.89 16.07 14.75 19.86 19.50 19.50 19.29 13.27 13.65 13.81 13.58 12.84 13.19 13.43 13.14 12.44 12.83 13.00 12.75 9.90 9.99 10.22 10.27 15.00 15.03 15.20 15.30 14.88 14.90 14.30 14.58 14.57 14.85 Mar. 4 11 18 25 15.73 15,53 14.13 13.48 14.35 14.17 13.06 12.64 13.06 12.76 11.96 11.83 14.13 13.43 12.10 12.27 15.59 15.40 14.10 13.47 15.09 14.89 13.64 12.87 19.00 18.71 17.86 17.50 14.01 13.70 13.24 13.33 13 48 13.18 12.80 13.02 13.03 12.76 12.37 12.59 14.53 14.18 13.98 10.40 10.34 9.81 10.09 15.40 15.40 15.40 Daily--Mar. 20 26 27 13.16 14.82 12.36 12.97 13.08 11.53 12.21 12.18 13.25 13.88 14.12 12.68 13.39 13.63 17.50 17.50 17.50 12.99 13.64 12.77 13.34 12.34 12.92 13.66p 13. Feb. 15.lop 36 p 14.55 14.42 15.06p 14.69p 1.a. 14.84 15.59 15.88 15.39 13.76 14.08 14.41 14.26 14.46 14.17 13 96 14.23 12.94p NOTE: Weekly data for columns 1, 2, 3, and 5 through 10 are statement week averages of daily data. Weekly data in column 4 are average rates set in the auction of 6-month bills that will be issued on the Thursday folqwing the end of the statement week. For colum 11, the weekly date is the mid-point of the calendar week over which data are averaged. Columns 12 and 13 are 1-day quotes for Friday and Thursday, respectively, following the end of the statement week. Column 14 Is an average of contract interest rates on commitments for conventional first mortgages with 80 percent loan-to-value ratios made by a sample of Insured savings and loan associations on the Friday following the end of the statement week. The FNMA auction yield is the average yield in a bl-weekly auction for short-term forward commitments for government underwritten mortgages; beginning July 7, 1980, figures exclude graduated payment mortgages. GCKA yields are average net yields to investors on mortgage-backed securities for immediate delivery, assuming prepayment in 12 years on pools of 30-year FllA/VA mortgages carrying the coupon rate 50 basis points below the current FUIA/VA ceiling. TABLE 2 1 NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES1/ (Millions of dollars, not seasonally adjusted) Treasury Treasury Federal Agencies Net Purchases 4/ - Loupon Net Purchases 3/ Period Bills Net Cange 2/ W thiln 1-year 1 - 5 5 - 10 Over 10 Total 1976 1977 1978 1979 1980 863 4,361 870 6,243 -3,052 472 517 1,184 603 912 3,025 2,833 4.188 3.456 2,138 1,048 758 1,526 523 703 642 553 1,063 454 811 5,187 4,660 7,962 5,035 4,564 4,164 118 1,101 81 51 292./ 110137 100 355,1 1,156541 -- 107 359 236 -- 541 -- 1979--Qtr. IV 1980--Qtr. 1 II III IV 1980--Aug. Sept. -2,945 3,249 -3,298 -58 -47 -37 STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC March 30, 1981 137 -- Within I-year Net Change Outright Net Total Ioldings Total 5/ RPs 6/ 891 1,433 127 454 668 6,227 10,035 8,724 10,290 2,035 I - 5 5 - 10 105 --47 131 217 469 792 45 317 398 203 428 104 5 29 114 213 24 -24 1,351 - -- -- - -- 81 410 320 -- 836 2,395 1,234 100 -217 --- -398 --- -29 --- -24 --- -668 --- -2,114 6,307 -2.157 -1 362 2,373 -1,381 1,107 236 -- 320 -- 1,234 -- --- --- -- -- --- 1,187 -128 -985 911 -- --100 --- ---- --- -- ---- -261 -1,100 1,360 1,267 332 -492 Over 10 4,839- 3,607 -2,892 -1,774 -2,597 2,462 -3,801 Oct. Nov. Dec. -241 -1,100 1,282 100 -- -- --- 1981--Jan. Feb. -3,764 -357 --23 --- --- -- --23 --- --- --- -- --- -3764 -32 -1,696 832 198L--Jan. 7 14 21 28 -268 -98 723 -2,477 ----- ---- ----- ----- ----- ----- ----- ----- --- -- -268 -98 723 -2,477 -5,031 4,339 -8,482 3,802 Feb. 4 It 18 25 -1,738 -100 -163 -- ---23 - ---- ---- ---- --23 -- --- ---- ----- ----- ---- -1,738 -100 -186 -3 3,779 67 954 -1,291 --- ---- ----- -- --- -- -- .. -- --.. ---- ---- ---- ----- 209 -4 1,399 -- -1,019 459 1,892 730 tar. 4 11 18 25 209 -1,399 .... -- --- -- .2 128.8 8.7 0.7 1.0 4.6 2.5 75.6 15.3 13.8 34.7 11.8 44.5 LEVEI.--Har. 25 (Ln billions) 1/ Change from end-of period to end-of-period. auctions. 2/ Outright transactions Id market and with foreign accounts, and redemptions (-) In bill Excludes redemptions, 3/ Outright transactions In market and with foreign accounts, and short-term notes acquired in exchange for maturing bills. maturity shifts, rollovers of maturing coupon issues, and direct treasury borrowing from ihe System. Excludes redemptions and maturity shifts. 4/ Outright transactions in market and with foreign accounts only. 5/ In addition to the net purchases of securities, also rdfiects changes in System holdings of bankers' acceptances, direct Treasury borrowing from the System and redemptions (-) of agency and I'reasury coupon issues. 6/ Includes changes In RPs (4), nmtched sale-purchase transactions (-)I and matched purchase-sale transactions (1). 7/ 8/ On October 1, 1979, $668 million of maturing 2- and 4-year notes were exchanged for a like amount of short-term bills, because the note auctions were delayed. On October 9 and 10, the bills were exchanged for new 2- and 4 -year notes, respectively. aturing 2-year notes were exchanged on June 2, 1980, for special 2-day bills. At their maturity the bills were exchanged for new 2-year notes. TABLE 3 STRICTLY CONFIDFNTIAL (FR) CLASS II - FOMC March 30, 1981 SECURITY DEALER POSITIONS AND BANK POSIIONS (Millions of dollars) flember Bank Reserve Positions U.S. Covt. Securities Dealer Positionss __utures & Forwards Cash) ills 7 Underwriting ons Coupons lls u Syndicato Corporate 'ositions Huniclpal Bonds Bonds Borrowlng at rRi Excess Reserves Total Seasonal 726 -122 2,960 628 207 2,866 93 510 3,439 177 215 5 816 0 1,644 97 150 99 19 9--11ghli L.ou 8,091 902 138 -2,569 19d0--IlhhI, Low 8,838 1,972 2,263 -1,682 1980--F.b. MHr. 2,937 2,964 -212 -659 -4,873 -7,665 -1,036 -1,135 211 186 2,823 7,838 167 1,372 1,429 -5,227 -77. 3,526 -1,40/.8 -1,563 -1,880 197 178 203 2,455 1,018 379 155 4,0)08 634 798 -416 2,438 3,081 414 -1,015 -1,97h4 -1,185 204 302 256 395 658 1,311 6 -1,556 -7,068 -9,812 -1,685 -2,663 -2,751 206 498p 552p Apr. Mliy June 3,724 1,080p1 -228p July Aug. Sept.L. 4,581 5,108 Oct. 2,447 Nov. 3,047 Dec. 4,287 143 149 20 198L--Jaj. Feb. 9,985 13,317 1,584 1,812 -11,976 -12,203 -2,884 -2,798 7,878 9,762 12,048 1,608 1,513 1,105 2,030 -10,987 -11,898 -11,727 -11,003 -2,837 -2,806 -2,941 -2,824 12,789 11,683 11,624 15,668 1,750 2,068 1,393 1,538 -12,176 -3,137 -2,901 -2,560 -2,676 3,681 1981--Jan. 7 14 8,823 21 28 feb. 4 11 18 25 Mar. 4 11 18 25 14,314" 14.9441, 13.662* 12,1831 -12,843 -11,697 -12,055 2.736* ,378* 2,641' -12,436* 4,213" -10.498* 2 -11.203* -12.865* -2,753A -3,160* -3,387* -3,237* Special 552 743 63 12 9 25 Adjustment 3,298 12 1,558 2,575 307 1,748 212 61 253 241 136 408 91 1,196 1,310 ,0 59 p 1,690p 97p l16 p 0 0 0 1,244 1,963p 554p 183p 1,395p 120p 48p 1,226p I,11 6 p 66 4p 741 p 507p 400p 2281) 1701p 298p -1651 697p 219p 3430 10 7p 2 66 14 8 p 0 1,117p 1,332p 112p 105p 0 0 1,419p 1,793p 123p 137p 0 1,201p l,113 p 1,145p 1,713p 125p 131p 154 p 160p 0 0 1,303p 1,299p 76 8p 774p 888p 176p 185p 193p 20 0p 0 0 0 0 0 00 0 1,574p 1,005p 1,227p 1,082p 1,6 56p 1,07 6 p 98 2 p 991p 55 3 1, 1. p 1 23 p 583p 581p 688p NOfr: (.overnr'Lnt securities dealer cjhli position' consist of securities already delivered, coninltments to buy (sell) securities on an outright basi for incrtdl.ite delivery (5 business days or less), and certain "when-issucd" securities for delayed delivery (more than 5 business days). Futures an forward positions Includa all other comnitLments Involving delayed delivery; futures contracts are arranged on organized exchanges. Undbr rlting syndicate poitions consist of issues In syndicate, excluding trading positions. UWetkly data are daily avetages for ntatement weeks, except for corpornLe and municipal issues in syndicate, which are Friday figures. Honthly averages for e/cess reserves and borrowing are welglitrd averages of statement week figures. Honthly data for dealer futures and forwards are endof-month figures for 1980. * Strictly confidential 

Federal Reserve (1981, March 30). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19810331

@misc{wtfs_bluebook_19810331,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1981},
  month = {Mar},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19810331},
  note = {Retrieved via When the Fed Speaks corpus}
}