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. 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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. September 27, 1985 Strictly Confidential (FR) Class I FOMC MONETARY POLICY ALTERNATIVES Prepared for the Federal Open Market Committee By the staff Board of Governors of the Federal Reserve System September 27, 1985 STRICTLY CONFIDENTIAL (FR) CLASS I - FOMC MONETARY POLICY ALTERNATIVES Recent Developments (1) M1 accelerated in August to a 20-1/2 percent annual rate and, based on preliminary data, growth appears to have remained rapid in September at around an 11 percent rate. Expansion from June to September has been well above the Committee's current 8 to 9 percent short-run path for M1. From its second-quarter base, M1 has increased at about a 15 percent pace, leaving it well in excess of its longer-run range. mate for nominal GNP in the third quarter, it Based on the staff esti- appears that M1 velocity declined at around an 8-1/2 percent annual rate--the sharpest drop since the fourth quarter of 1982. The strength in M1 has been widespread by component. Currency growth has averaged more than 8 percent since June, while demand deposits have increased at a 7-1/2 percent rate after two months of doubledigit growth in late spring. Other checkable deposits grew most rapidly, accelerating in August for the fourth consecutive month before slowing appreciably in September. (2) Normal lagged responses to declining interest rates explain some of the strength in M1, but by no means all. The rapid increase of M1 in the third quarter particularly has been well in excess of model predictions--by about 8 to 11 percentage points at an annual rate. misses have been spread across all of the components of M1. The model While the public appears to have increased its preference for M1-type assets relative to income and interest rates, it has been difficult to identify specific factors--such as heightened uncertainties or more cautious cash management practices--that would lead to such a large shift in attitudes. KEY MONETARY AGGREGATES (Seasonally adjusted annual rates of growth) June to Sept.Pe QIV to Sept.pe Sept.pe July Aug. M1 9.3 20.5 11 14 M2 8.7 11.2 7 9 9-1/2 M3 4.3 8.6 9 7-1/2 8 Domestic nonfinancial debt 12.0 11.3 10 11 Bank credit 10.1 7.0 10 9 10 Nonborrowed reserves 3 10.6 19.6 4 11-1/2 16 Total reserves 12.2 16.6 6 12 15-1/2 Monetary base 6.8 13.4 12 11 9-1/2 Adjustment and seasonal borrowing 600 503 5884 Excess reserves 855 829 6294 Money and Credit Aggregates 151 12-1/2 Reserve Measures 2 Meno: (Millions of dollars) pe--preliminary esti-ate NOTE: Monthly reserves measures, including excess reserves and borrowing, are calculated by prorating averages for 2-week reserves maintenance periods that overlap months. 1. Growth is 12-1/2 2. Growth tinuities from the second quarter to Septexber. Growth fran QIV to September percent. rates of reserve measures are adjusted to remove the effect of disconresulting from phased changes in reserve ratios under the Monetary Control Act. 3. Includes "other extended credit" from the Federal Reserve, but not special situation borrowing by thrifts that was part of adjustment plus seasonal borrowing until it was entirely reclassified as extended credit in mid-June. 4. Averages through September 25. (3) Developments within M2 tend to confirm an enlarged demand for liquidity in recent months. The savings component of M2 continued to expand unusually rapidly in August and early September, and growth in MMDAs also has remained robust. At the same time, the runoff in small time deposits that began at midyear has persisted into September. However, as the month pro- gressed, there were indications that these trends could be diminishing. Growth of M2 in the aggregate has been nearer the Committee's range than in the case of M1. Between June and September, M2 grew at around a 9 percent annual rate, somewhat above the Committee's short-run target path of 8-1/2 percent; the aggregate currently stands just above the parallel band associated with its long-run range. (4) M3 growth averaged more than 7 percent over the June-to- September period, above its 6-1/2 percent short-run path. middle of its long-run range in September. M3 was near the Growth picked up in August and September, as commercial banks stepped up their use of managed liabilities, including RPs, Eurodollars, and large CDs, in part to fund a runoff in government deposits. Thrift institutions were net issuers of large time deposits in September for the first time since late spring. (5) Growth in domestic nonfinancial sector debt remained generally brisk in August at about an 11-1/4 percent annual rate; debt expanded at a 12-3/4 percent annual rate from the fourth quarter through August, above its 9 to 12 percent annual growth range. Business borrowing was substantial in August, concentrated in longer-term debt markets, but appears less heavy in September. Tax-exempt financing has been quite strong, owing in part to anticipated changes in tax law. The moderating trend in consumer credit growth may have been interrupted in late August and September by special financing programs by captive auto finance companies. Treasury debt issuance has been constrained in late September by the lack of Congressional action to raise the debt limit; the end-of-quarter financing auctions were postponed and the size of weekly bill auctions has been cut back. (6) Total reserves expanded at an 11-1/2 percent annual rate on average in August and September, with a deceleration in the latter month reflecting some slowing in M1 growth and a drop in the average level of excess reserves. Nonborrowed reserves (including extended credit) followed a similar pattern. The nonborrowed reserve path for the intermeeting period was initially constructed allowing for $425 million of adjustment plus seasonal borrowing at the discount window, at the center of the $350 to $500 million range indicated as the Committee's preference at the August meeting. With M1 diverging further from the FOMC's path, and M2 and M3 also strong relative to objectives, the allowance was raised to $500 million in early September. Actual borrowing, after being boosted substantially by a wire transfer problem in early September, averaged $515 million in the most recent maintenance period. (7) The federal funds rate averaged close to 7-7/8 percent in each week since the August FOMC meeting, little changed from its level prior to the meeting. The funds rate was expected to average around 8 percent following the minor adjustment in borrowing in early September. Reserve pressures did not show through until late on the settlement day of the most recent reserve period, as money market trading was dominated by market expectations that underlying restraint on bank reserve positions would be unchanged. Such attitudes in recent days were perhaps reinforced by inter- pretations reported in the press of the significance for monetary policy of the G-5 announcement last weekend that implied concerted action consistent with a decline in the exchange value of the dollar. Treasury bill -5rates have declined about 10 to 35 basis points since the last FOMC meeting, influenced in part by the large paydown of bills occasioned by debt ceiling problems. Interest rates on Treasury bonds, meanwhile, have shown little net changes, while yields on federal agency securities have advanced rather sharply in the wake of the reports that the Farm Credit System might need substantial financial assistance. Spreads of Farm Credit securities over comparable Treasury issues are averaging about 60 to 100 basis points, compared with more normal levels of 5 to 25 basis points. (8) The weighted average foreign exchange value of the dollar has declined on balance about 4 percent since the last meeting. In the first three weeks of the intermeeting period the dollar rose by more than 5 percent in reaction to apparently more favorable data on economic activity, particularly August employment figures. Subsequent economic indicators looked less buoyant, however, and the dollar began to retreat. Then, on September 23, following the G-5 announcement, the dollar dropped more than 4 percent, with somewhat larger declines against the mark and the yen. Over the next four days, the dollar declined a little further on average, reflecting in particular weakness against the yen. . The Desk has sold (for Treasury and System account) a total of $310 million-$214 million against yen and the remainder against marks. -6- Policy Alternatives (9) The table below provides three alternative specifications for growth of the monetary aggregates from September to December along with associated federal funds rate ranges. (More detailed data, including growth implied for each alternative from the base periods for the longrun ranges to the fourth quarter, are presented in the table and charts on the following pages.) Alt. A Alt. B Alt. C Growth from September to December Ml 7-1/2 6-1/2 5-1/2 M2 7-1/2 6-3/4 6 M3 7 6-1/2 6 5 to 9 6 to 10 Associated federal funds rate range (10) 7 to 11 Each alternative involves a marked slowing in M1 growth, but at the same time all would lead to growth over the second half of the year well above the FOMC's target range for that period. For M1 to reach the top of its cone by December would require a decline at a one percent annual rate from September, and a much sharper drop of about 5-1/2 percent at an annual rate would be necessary to produce a fourth-quarter average consistent with the upper bound of the Committee's range. Although M1 demand can be expected to abate following its extraordinary surge since late spring, a decline in outstanding M1 over a three-month period seems unlikely, given the upward tilt provided by inflows of savings funds into NOW accounts at around current or even somewhat higher interest rates. Alternative Levels and Growth Rates for Key Monetary Aggregates M3 M2 Ml ------------------------------------- ------------------------ --------------------Alt. C Alt. B Alt. A Alt. C Alt. B Alt. A Alt. C Alt. B Alt. A 1985--July August September October November December 595.8 606.0 611.4 595.8 606.0 611.4 595.8 606.0 611.4 2490.6 2513.8 2528.2 2490.6 2513.8 2528.2 2490.6 2513.8 2528.2 3113.7 3136.0 3159.1 3113.7 3136.0 3159.1 3113.7 3136.0 3159.1 614.6 618.8 622.9 614.2 617.8 621.3 613.9 616.9 619.8 2543.2 2560.2 2575.6 2541.7 2556.5 2570.9 2540.2 2552.9 2566.1 3178.7 3198.0 3215.2 3177.3 3195.0 3211.2 3175.9 3192.0 3207.3 9.3 20.5 10.7 9.3 20.5 10.7 9.3 20.5 10.7 8.7 11.2 6.9 8.7 11.2 6.9 8.7 11.2 6.9 4.3 8.6 8.8 4.3 8.6 8.8 4.3 8.6 8.8 6.3 8.2 8.0 5.5 7.0 6.8 4.9 5.9 5.6 7.1 8.0 7.2 6.4 7.0 6.8 5.7 6.0 6.2 7.4 7.3 6.5 6.9 6.7 6.1 6.4 6.1 5.8 10.6 10.2 15.0 9.5 10.6 10.2 15.0 8.9 10.6 10.2 15.0 8.3 12.0 5.3 10.2 7.8 12.0 5.3 10.2 7.2 12.0 5.3 10.2 6.7 10.7 5.2 7.5 7.8 10.7 5.2 7.5 7.4 10.7 5.2 7.5 7.1 14.8 14.8 14.8 9.3 9.3 9.3 8.1 8.1 8.1 11.9 11.4 10.9 9.0 8.9 8.7 8.0 7.8 7.7 12.4 12.1 11.8 9.1 9.0 8.8 8.0 7.9 7.8 13.7 7.5 13.7 6.5 13.7 5.5 9.0 7.5 9.0 6.8 9.0 6.0 7.3 7.1 7.3 6.6 7.3 6.1 Growth Rates Monthly 1985--July August September October November December Growth Rates 1985--Ql Q2 Q3 Q4 Long-run base period to Sept. 85 Long-run base period to Dec. 85 Long-run base period to Q4 85 1985 June to Sept. 1985 Sept. to Dec. Chart 1 ACTUAL AND TARGETED M1 81 Bill Ione of do IITrs 1 640 -- 630 ACTUAL LEVEL PROJECTED LEVEL SHORT RUN ALTERNATIVES 620 -- 610 600 -- 590 580 - 570 -H 560 -- 550 I I ~""'~""' 0 N 1984 D I I J I F t M I A I M I J J 1985 I I A "~ I S I 0 N I I D 540 J Chart 2 ACTUAL AND TARGETED M2 Bill ions of do! lers - 2650 2600 --- ACTUAL LEVEL PROJECTED LEVEL *SHORT RUN ALTERNATIVES -- 2550 -- 2500 -- 2450 -- 2400 -- 2350 -4 2300 I I I 0 N N 1984 ,I D D I I J F M J F M A t I A M J I I I I I J 1985 IA S A S 0 N D N D 2250 J Chart 3 ACTUAL AND TARGETED M3 B I I lona of dol I ar 3350 ACTUAL LEVEL -- .9£l --- PROJECTED LEVEL * -- 3250 SHORT RUN ALTERNATIVES .**' / 6 - 3150 3050 2950 I O N 1984 D I I I J F I II M A M J J 1985 A S N D 2850 J Chart4 DEBT BIll Ione of do) Ir 1 6800 - ACTUAL LEVEL -- 6600 --- PROJECTED LEVEL - a 6400 -- 6200 -- 6000 -- 5800 S I D SN 1984 1 I J I F I M I A I M I J J 1985 I I A I S I 0 I N I D J 1986 5600 Thus, a very sharp tightening of reserve pressures would appear necessary to bring M1 within the current longer-run range by year-end. On the other hand, M2 and M3 are likely to be near or within their respective ranges for the year without so substantial a tightening. (11) Alternative B assumes unchanged pressures on reserve positions, with adjustment plus seasonal borrowing at the discount window between $450 and $550 million and federal funds trading around 8 percent, or a bit higher. Ml growth would be anticipated to slow to a 6-1/2 percent annual rate from September to December. Available data for September suggest that some abate- ment of the pronounced shifting to highly liquid monetary assets, including transactions deposits, already is in train. This process would be further encouraged if public expectations of higher interest rates on market instruments and small time deposits, which seemed to contribute in a degree to the earlier liquification, began to give way in the face of essentially stable short-term interest rates through year-end. In addition, M1 could be relatively weak in October if its unusual contraction in October 1984 indicated the emergence of a new seasonal pattern (not yet reflected in seasonal factors). Even with the slowing of M1 in caning months anticipated by this alternative, growth on a quarterly average basis, at about 8-3/4 percent for the fourth quarter, implies a further decline in velocity on the order of 3 percent, given the staff GNP forecast. Such a decrease would bring the drop for the year to around 5-1/2 percent, about matching the decline over 1982 that was unprecedented over a four-quarter period in the postwar years. (12) Growth of M2 and M3 is also expected to slow in the September-to-December period under alternative B, owing primarily to the deceleration of their M1 component. This slowing would bring M2 to the -9- upper bound of its annual range by the fourth quarter, implying average growth in the fall quarter more in line with, though still above, the projected expansion of nominal GNP. of its long-run range. M3 should remain around the middle Issuance of managed liabilities is anticipated to pick up as core deposit growth slows. Banks may more actively offer such liabilities, however, should they decide to enlarge their securities portfolios greatly given the unusually heavy fourth-quarter issuance of Treasury debt and tax-exempt securities. (13) The debt of domestic nonfinancial sectors is projected to grow faster over the final three months of the year as Treasury borrowing surges far above the third-quarter pace to finance an enlarged deficit and to make up for postponements related to debt ceiling problems. Heavier issuance of debt by the business sector also is expected, reflecting a resumption of inventory accumulation and a bit weaker cash flow, while net equity issuance is assumed to remain deeply negative as the pace of merger and other financial restructuring activities continues substantial. Slower growth of consumer credit over the quarter as a whole, related to a weakening in household spending on durable goods, is likely to more than offset an edging up of mortgage borrowing. Overall, growth of domestic nonfinancial debt for the year is projected at more than 12-1/2 percent, compared with the 12 percent upper bound of the FOMC's monitoring range. Roughly one percentage point of the growth reflects unusual merger and financial restructuring activity and another small amount (perhaps 1/4 percentage point or so) represents acceleration of tax-exempt borrowing in anticipation of possible tax law changes. -10- (14) Both total and nonborrowed reserves are likely to grow at around a 7 percent annual rate over the final three months of the year, given reserve pressures assumed under alternative B. With federal funds trading persistently around 8 percent, other private short-term rates would rise from current levels. A relatively larger upward adjustment of bill yields could occur once the debt ceiling is raised and net issuance of bills is resumed. percent area. The 3-month bill rate might increase to the 7-1/4 Bond yields would also rise, at least temporarily, as the Treasury, partly because of debt ceiling problems, markets about $47 billion of notes and bonds ($26 billion for new cash) within a short period in the latter part of October and early November. The firming of interest rates that appears possible under this alternative could exert sane upward pressure on the dollar in foreign exchange markets. Under those conditions, a continued decline in the dollar would depend in part on the timing and extent of exchange market intervention activity. interaction between the dollar and interest rates is, The of course, two-way. As the dollar declines, interest rates could come under further upward pressure, reflecting market concerns that more attractive returns would be required on U.S. securities at a time when external financing needs remained large and foreign investors may come to expect further exchange losses. (15) Alternative A assumes a reduction of adjustment plus sea- sonal borrowings to a $250 to $350 million range, or a cut in the discount rate. The federal funds rate would drop to around 7-1/2 percent. The 3-month Treasury bill rate would probably move down to the 6-1/2 to 6-3/4 percent range, around the low reached briefly in mid-June. term rates would also decline. Private short- Quality spreads, which have tended to -11widen in recent months, would probably narrow somewhat as debt servicing burdens are lessened by lower market rates and in reflection of more favorable odds of a strengthening in real economic growth. Market edginess about Farm Credit System and FHLB securities is likely to persist, however, until resolution of the problems of these agencies seem more clearly in prospect. The international value of the dollar could be expected to move lower, perhaps substantially given the context of the recent G-5 announcement and intervention policy. In that case bond yields might not decline in sympathy with short-term rates, partly for reasons noted in paragraph (14) but also partly because of possible concerns about inflationary implications of a rapid drop in the dollar occurring in tandem with an easing of money markets and relatively rapid M1 growth. (16) An easing of reserve pressures would be expected to keep M1 farther above its upper bound than under alternative B and increase the likelihood that M2 would remain slightly above the upper end of its range through December. The fall in market rates under alternative A could retard a movement by the public away from highly liquid monetary assets. Deposits subject to interest prohibitions or ceilings would become relatively more attractive, while because of adjustment lags on offering rates, spreads for super NOWs, MMDAs, and money funds relative to market instruments would temporarily improve. In contrast, M3 would very likely stay well within its annual range, moving only slightly more above its midpoint by December, as reduced reliance by depository institutions on issuance of managed liabilities partly offsets the greater influx of core deposits. (17) Alternative C assumes some tightening of reserve conditions consistent with a marked slowing of M1 growth over the next three months to around a 5-1/2 percent annual rate and with enough moderation of M2 growth -12- possibly to move just within the target range for the year. Borrowing is assumed to average $650 to $750 million, with federal funds moving up to around 8-1/2 percent. markets. Such a firming of policy would tend to surprise The 3-month bill rate might rise to around 7-3/4 percent, and bond yields would also show a substantial increase, particularly during the Treasury financing periods. Private interest rates may rise somewhat more than comparable Treasury yields because of market concerns about the health of certain sectors and financial institutions. Some upward pressure on the exchange value of the dollar may also be expected, partly as the efficacy of intervention operations in that context is brought into question. However, more favorable investor attitudes toward the dollar would be tempered if expectations about U.S. economic activity worsened in the wake of higher interest rates. -13- Directive language (18) Proposed language is shown below not only for the operational paragraph of the directive but also for a paragraph dealing with the long-run ranges for the monetary aggregates for 1985, should the Committee wish to reconsider them at this time. Such a re-evaluation may be needed in particular because of developments affecting M1. The proposed paragraph on the long-run ranges, shown immediately below, could be placed in the directive just before the operational paragraph. PROPOSED ADDITIONAL PARAGRAPH ON 1985 RANGES At its October meeting the Committee reviewed the long-run ranges for the monetary aggregates for 1985, particularly the range for M1 established in July. Taking account of the further sharp drop in M1 velocity in the third quarter, and evidence of a shift in preferences by the public toward highly liquid assets, the Committee agreed that growth of M1 above the 3 to 8 percent range covering the period from the second quarter to the fourth quarter of 1985 would be appropriate [acceptable]. The Committee reaffirmed its earlier views with respect to the other aggregates. (19) are presented. With regard to the operational paragraph, two variants The first closely follows the format of the previous directive, and includes suggested deletions from the current directive and proposed additions indicated in the usual manner. A proposed option in this variant (shown in brackets) would explicitly indicate acceptability of a shortfall in the rate of M1 growth from expectations. The second variant is presented for consideration should the Committee wish to restructure the directive to reflect the more coordinate treatment of money and the other financial and economic variables in the -14- inplementation of policy that has characterized recent Committee practice. The word "possibly" shown in the bracketed section is intended to provide an option for asymmetric intermeeting reserve adjustments--an option that has been indicated in past directives by the use of "might" or "would" in the sentences pertaining to unexpected growth in the aggregates that have been superseded by the proposed wording in variant II. The last sentence of the variant has been adjusted to conform with the more coordinate treatment of the aggregates and other variables. OPERATIONAL PARAGRAPH Variant I In the implementation of policy for the immediate future, the Committee seeks to DECREASE SOMEWHAT (Alt. A)/ maintain (Alt. B)/ INCREASE SOMEWHAT (Alt. C) the EXISTING degree of pressure on This action is expected sought in recent weeks]. reserve positions [DEL: to be consistent with growth in M2 and M3 at annual rates of 8-1/2and 6-1/2]____ around [DEL: AND ____percent, respectively, during June to]September TO DECEMBER. the period from [DEL: M1 growth is recent] THIRD-QUARTER pace, TO AN ANNUAL expected to slow from its [DEL: the but given RATE OF AROUND ____ PERCENT[DEL: in rapid growth recent weeks, expansion over the June to] September TO DECEMBER period; [EVEN SLOWER GROWTH OVER THE NEXT THREE MONTHS WOULD BE APPROPRIATE IN THE CONTEXT OF SATISFACTORY ECONOMIC PERFORMANCE [DEL:be AND GIVEN RECENT VERY RAPID GROWTH IN M1] may rate.] annual percent at an 8 to 9 Somewhat greater restraint would be acceptable in the event of substantially higher growth in the monetary aggregates. Somewhat lesser restraint would be acceptable in the event of substantially slower growth. In -15- either case such a change would be considered in the context of appraisals of the strength of the business expansion, developments in foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets. The Chairman may call for Committee consultation if if appears to the Manager for Domestic Operations that pursuit of the monetary objectives and related reserve paths during the period before the next meeting is likely to be associated with a federal funds rate persistently outside a range of [DEL: 6-to-10] ____TO ____ percent. Variant II In the implementation of policy for the immediate future, the Ccmmittee seeks to decrease somewhat/ maintain/ increase somewhat the existing degree of pressure on reserve positions. This action is expected to be consistent with growth in M2 and M3 over the period from September to December at annual rates of ____and ____ percent, respectively. period to a ____ A marked slowing of M1 growth over the Some- percent annual rate is also anticipated. what greater or lesser reserve restraint [somewhat greater or possibly somewhat lesser/ somewhat lesser or possibly somewhat greater] would be acceptable depending on behavior of the aggregates, appraisals of the strength of the business expansion, developments in foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets. The Chair- man may call for Committee consultation if it appears to the Manager for Domestic Operations that reserve conditions during the period before the next meeting are likely to be associated with a federal funds rate persistently outside a range of ____to ____percent. Selected Interest Rates Percent September 30, 1985 11.11 1984--igh Low 10.65 10.76 8.01 11.09 0.39 11.11 8.24 11.35 8.04 10.72 8.38 13.00 11.00 13 44 10.39 13.84 11.30 13. 1 11.36 15.30 12.70 11.44 9.86 14.68 13.14 14.00 12.50 13.29 12.03 13.00 11.50 11.14 9.47 10.01 12.11 1985--High Low 8.75 7.13 8.65 6.77 9.03 6.92 9.21 7.01 9.13 7.34 0.83 1.22 8.31 7.00 10.75 9.50 I1.19 8.43 1984--Aug. Sept. 11.64 11.30 10.47 10.37 10.61 10.41 10.71 10.51 11.47 11.29 11.19 11.11 10.58 10.62 13.00 12.91 12.50 12.34 12.72 12.52 12.54 12.29 14.12 13.86 10.40 10.54 14.47 14.35 13.70 11.50 12.14 12.00 9.74 8.61 8.06 9.87 8.81 8.26 9.93 9.01 8.60 10.38 9.18 8.60 10.05 9.01 0.39 10.16 6.55 12.58 II.?0 11.06 11.85 10.90 10.56 12.16 11.57 11.50 11.98 11.56 11.52 13.32 12.98 12.68 10.77 10.69 10.40 14.13 13.64 13.18 13.30 12.75 12.50 11.96 11.54 11.01 7.99 8.46 8.74 8.00 1.80 7.97 10.61 10.50 10.50 10.43 10.55 11.05 11.38 11.51 11.86 11.45 11.41 11.81 12.78 12.16 13.17 9.96 10.07 10.23 13.06 12.92 13.11 12.50 12.50 12.63 10.84 10.63 10.92 9.15 9.05 11.4 10.68 10.16 11.05 10.45 1112.75 12.25 11.60 9.85 9.46 9.18 13.20 12.91 12.21 12.15 12.30 11.50 10.83 10.56 9.89 10.31 10.33 10.50 10.56 11.64 11.76 9.20 9.44 12.06 12.19 11.50 11.50 9.68 9.31 9.99 9,.43 8.38 Oct. Nov. Dec. 9.34 11.95 10.00 1189 10.30 13.23 11.37 10.31 9.13 8.35 8.50 8.58 7.76 8.27 8.52 8.00 8.39 8.90 8.33 9.06 6.14 8.69 9.02 7.48 6.95 8.23 1.63 1.09 8.44 7.85 7.21 6.49 1.92 7.44 8.31 8.11 1.97 7.53 7.80 7.34 7.97 7.71 7.21 10.50 10.31 9.78 7.88 7.90 7.08 7.14 7.64 1.32 7.31 7.48 7.58 7.73 7.03 7.08 9.50 9.50 7.62 7.13 7.46 7.12 6.77 7.00 1.21 6.92 7.19 7.37 7.10 7.38 7.40 7.22 7.34 1.29 7,66 7.81 7.46 7.34 7.52 7.01 10.00 9.06 9.50 9.09 8.86 9.22 10.10 10.02 10.39 10.43 10.34 10.60 11.50 11.71 11.62 9.18 9.19 9.24 12.27 12.05 12.15 11.50 11.50 11.50 9.90 9.83 9.77 6.91 6.90 7.03 7.21 7.23 7.04 It Jtly 26 3 10 17 24 31 8.06 8.07 1.71 7.88 7.64 7.32 7.39 1.22 7.07 7.21 1.43 7.51 7.55 7.44 7.59 7.75 7.78 7.49 1.46 7.51 7.68 7.69 7.12 7.09 7.01 7.00 7.00 9.50 9.50 9.50 9.50 9,.50 9.11 8.03 9.06 9.34 9.46 10.25 10.00 10.19 10.42 10.60 10.47 10.30 10.39 10.57 10.73 11.37 11.53 11.62 11.81 11.83 9.25 9.18 9.13 9.25 9.35 12.13 12.03 11.94 12.03 12.17 11.50 11.50 11.50 11.10 11.50 9.72 9.78 9.56 9.13 9.61 7 14 21 21 7.92 7.88 8.06 7.78 7.26 1.13 7.12 7.05 71.46 1.36 7.29 7.18 7.61 7.51 7.44 7.39 7.85 7.79 7.83 7.77 7.78 7.71 LOS 1.05 1.69 7.01 7.14 9,.50 9.50 9.50 9.54 9.31 9.21 9.19 10.60 10.40 10.23 10.14 10.72 10.64 10.52 10.42 11.78 11.82 11.70 11.73 9.40 9.41 9.45 9.43 12.21 12.24 12.18 12.11 11.50 11.50 11.50 11.50 9.57 9.47 9.59 9.45 Sept. 4 11 14 25 7.88 7.80 7.85 7.96 7.09 7.22 7.19 6.94 7.25 7.40 7.37 7.14 1.43 7.60 1.57 1.42 7.82 7.93 8.01 7.90 7.74 7.01 7.07 7.81 7.93 7.80 7.12 7.18 9.50 9.50 9.50 9.50 9.27 9.49 9.45 9.29 10.20 10.45 10.43 10.36 10.43 10.68 10.65 10.61 11,89 11.92 11.91 II.60p 9.41 9.60 9.69 12.15 12.24 12.21 12.11 11.50 11.50 11.50 11.50 9,52 9.57 9.51 9,49 Daly-Sept. 20 26 7.93 7.81 7.01 6.94 7.27 6.93 7.51 7.33 7.99 1-7 7.89 7.66 9.50 1.10 9.40 9.12 10.36 10.22 10.58 10.0 1985-Jan. Feb. Mar. Apr. Kay June 41r July Aug. 198I5-Jue 12 19 ug. 8.56 7.26 NOTE Weekly data1o column* 1 through 1 are starl nt week aver gs D n column 7 ae Iaken fromn Donoghue's Money Fund Reporl. Columne 12 and 13 re 1 day quotes for Friday and Thurwday. rspecllvly. following othend ol the rtatement wea. Colien 13 I8 he Bond Buywerevenue IndQe Column 14 Is an aveMag ol contrctl Intwl t rate on new conmiltmwenl for conwnlional Ikst morgages wIth 1.49 9.74 9,52 ----- raios at a smpi oof ulns and oan asociacllton on the Friday followmig ihoe nd of the aflm tnlWk. ColumeIs1 t aer 19 Inital contract roaeon new commllinte tsor oneyear ARM U a lhoae intllulions ofIn bbell limed and adlusllet l monrtgages with ohesal number o discount ponls. 0 pewcent loan-lo-vau FR 1387 (985 Security Dealer Positions Millions of dollars P"od Nl1e Total Treasury bills under year Csh Positions Sauy coupons I I over 1 year federal aency prvate short-ternnm September 30, Tresury bills Forward and Futuree peotion Treasury oupon under ver I lederl 1 year 1 year j gency I 1985 privrt s Mhort-lrm 15.505 -1,251 1.296 -1.038 6,840 -3,664 19,525 11,086 21,064 11,263 8 212 -14.456 131 -321 3 381 -986 -1,223 -10.679 -4 -11.053 53,514 .8162 14,775 157 2,069 -390 6.479 -8.570 24.613 16,692 21,623 14,603 3.800 -14,946 117 -138* 6.909 -313 -6.190 -11.972* 7.036 -28,599 11.916 4.42 10,316 -89 310 -1,184 623 16,098 14,063 15.556 17,695 -9 771 -240 -122 2 .505 2.156 -9.073 -6.334 -9.304 -8.960 11.649 9.748 13.841 116 -4687 -416 2,649 5,081 So06 4,762 13,168 16.106 18.470 16.265 17.950S 19,180 -9,867 -6 549 -11.711 -72 -76 59 2,154 533 -389 -8 815 -9.229 -8,313 -5.312 -11.991 -9.256 11.614 12,456 Mar. 24.023 32.957 48.604 14,133 -110 851 1,316 2,467 221 -4.342 19.416 19,614 19,342 19.977 19,444 16.216 -13,318 -3,648 845 -31 -12 -52 702 2,494 4,676 -7.033 -8.179 -8.353 -9,659 -10.289 4.823 Apr. May June 36,699 22.467 13.111 11,621 7.996 4,638 1,203 1,082 844 -4,550 -3,979 -3,868 18,050 19,818 22,746 17,560 19,313 19,266 -2,966 -5.888 -4.991 to 10 95 61 5.569 6,104 4,464 -7.833 -1,903 -9,614 -1.915 -14.172 -19.733 July Aug. 20,519 1,293 1,376 -4,131 -5,426 23,461 23.108 18,388 17,316 1984-High low 32,155 5.107 Low 1984--Aug. Sept. 21 955 19,094 Oct. 26.220 Feb. 17, 40 1985--June 19 26 July Aug. 12.445 17.167 2,949 .,327 5,454 1,226 745 586 -3.891 -5,526 22.541 22,628 18.119 17,399 22.206 578 21,151 18.034 2,908 4,107 4.089 2.041 893 1,022 1,136 1,435 1,651 -895 -1.320 -3.686 -6,920 -6,056 22.329 24.178 24.613 21.605 22.083 18,339 21.413 18,538 17.428 16.355 20,1067 2,521 1.310 24,457 14.67? 13,982 8.312 1.112 1,194 -6,570 -5.228 -6.202 -2,841 22.784 213,55 22.988 22.944 18,032 17,623 17.346 16.381 -2,107* -4,8400 -6.058* 25 14,659* 6,4t3* 4.622' 6,002* 7,474* 23. 18 16.687* 1.01* 16.836' 17.757* 17,9014 16.607* 17,929* 3 10 l; 11? 24 31 7 14 21 28 Sept. 4 II 22,582 19.o09 5.356 5,280 1,316 1,356 1.007* 1.081* 93* -5.740* 0 3 36 24 ,290* 24,227' 231,74 NOTE: Govemmenl securities dealr cash positions conist of securities already delivered, com. mllments to buy (ll) securitIes on an oultrghl basis for Immediate delivery i5 business days or lese). and certain "when-ssued" securillli lor delayed delivery more than 5 business dayei. Futures and lor ward positions Include all other comlmtment involving delayed delivery; Iuturs conltrcts are arrangmd on oganized *changes. 1. Cash plus torwsrd plus tuturee potlllons in Treasury, federal agency, and private hort-term securitles Strictly confidential -7 312 -5.200 -7.41S -6,006 -2,073 -1,493 -5.221 -7.087 -4.595 -3.815 -6.388 -7,027 -7.619 -8.262 -7,443 -3.990* -4,464' -9.3614 3,781 5,256 -10,102 -11.323 -9,845 -10.216 4.933 4.436 -9,672 -9.684 -19.844 -11,019 -I -5 3.654 2.820 -I 3.195 -13 -43 4.389 4,353 -9,054 -9,340 -10.446 -10.156 -10,352 -12.141 -14,702 -12.534 -6.081 -5,108 -I1 -37 -42 -138 4.935 6.538 5.110 4,885 -10,600 -11,833 -11.972 -10,920 -3,956 -9.040 -11.425 -14,704 3.615* 3.700' 4.0564 5.043# -11,291* -12,394* -12.196* -11,107* -14.604* -15.155 -12,312* -14.038* -IS -I -64 b8 -7 -141* -120* -1071 -28* STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC Net Changes in System Holdings of Securities 1 Millions of dollars, not seasonally adjusted September 30, 1985 Treasury bills net2 change Period Treasury coupons net purchases w 1yr 5-10 1-5 3 over 10 Federal agencies net purchases | total 1980 1981 -3,052 5,337 912 294 2.138 1,702 703 393 811 379 4,564 2.768 1982 1983 1984 5,698 13,068 3,779 312 484 826 1,794 1,896 1,938 388 890 236 307 383 441 2,803 3,653 3,440 1984-QTR. 1 II III IV -1,168 491 -424 4,880 198 600 28 808 1,130 -300 200 -335 -277 164 -300 1,484 600 1,657 1985-QTR. I II -2.044 7,183 961 245 465 846 -100 108 96 1,326 1,295 1985--Feb. Mar. 2,362 -138 -961 -465 -- - 1,426 Apr. May June 6,026 -942 2,099 245 - 846 -- 108 - 96 -- 1,295 -- July Aug. -200 3,056 - -- -- 1985--July Aug. Sept. ---- 68 524 32 155 -- 6 -- 25 2,615 10 307 510 -- 26 79.3 --200 - 7 14 21 28 4 11 19.3 6 6 --- 75 3 10 17 24 31 18 LEVEL--Sept. - -- - 35.1 -12 - - - - --- - - --- -- 14.9 21.5 8,312 16,342 6.964 1,461 -5,445 1,450 - -- - - -1,555 1,918 169 6,432 -286 70 1,982 -316 -- 735 8,409 462 -350 --- -- 2,345 1,289 3.095 -318 - - - -- - - 7,321 -951 2,039 6,141 -9,257 2,766 -- -- -- -246 3,038 -1,815 -53 - -- -- -- - --- -- --- -- - -- - - - -- - - -- -- - -- - --- - -- - - -- - - 739 ---- ---- -- - -- - - - - --- - - - -- --- 2.615 10 307 510 813 1,207 -5,192 82 183.1 -4.7 - - - -- --- 1 Change from end of-period to end of period. 2 Outright transactions in market and with foreign accounts, and redemptions (- in bill auctions, 3 Outright transactions in market and with foreign accounts, and short-term notes acquired in exchange for maturing bills Excludes redemptions, maturity shifts, rollovers of maturing coupon issues, and direct Treasury borrowing from the System 4 Outright transactions in market and with foreign accounts only. Excludes redemptions and maturity shifts -- --- - - 90.8 Net RPs' - - - tol 2,462 684 668 494 --- Net change outright holdin 2.035 8,491 - -- .. - total 24 - 12 -- 10 over 10 over -- 298 360 - - 0 510 29 217 133 --- ---- 6 .. - -- | 15 1-5 4 2.5 4.1 1.3 .4 - 75 --200 -46 921 -3,000 701 79 494 32 155 406 1,369 -1.669 2,224 1,687 6,785 5 In addition to the net purchases of securities, also reflects changes in System holdings of bankers' acceptances, direct Treasury borrowing from the System and redemptions (-I of agency and Trea sury coupon issues. 6 Includes changes in RPs (+), matched sale purchase transactions (-), and matched purchase sale transactions (+). FR 1R8 171811 

Federal Reserve (1985, September 30). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19851001

@misc{wtfs_bluebook_19851001,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1985},
  month = {Sep},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19851001},
  note = {Retrieved via When the Fed Speaks corpus}
}