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. August 14, Strictly Confidential (FR) 1987 Class I FOMC MONETARY POLICY ALTERNATIVES Prepared for the Federal Open Market Committee By the staff Board of Governors of the Federal Reserve System STRICTLY CONFIDENTIAL (F.R.) CLASS I - FOMC August 14, 1987 MONETARY POLICY ALTERNATIVES Recent Developments (1) M2 growth picked up a little in July, although at a 2-3/4 per- cent annual rate, expansion of this aggregate was less than the Committee's 5 percent path for June to September and fell further below the 5-1/2 percent lower bound of its 1987 target range. The strengthening of M2 was accounted for entirely by a turnaround in M1, which edged up at a 1-3/4 percent pace in July after the substantial runoff in June. Demand deposits declined in July but at a much reduced rate from June; weakness in these deposits may have stemed in part from continued reductions in compensating balances and a further slowing in mortgage refinancing in response to previous increases in interest rates. Other checkable deposits resumed growth in July, albeit at a moderate 6-1/4 percent rate, after the nearly unprecedented June decline. Weekly data for late July and early August suggest that some further strengthening of growth in both M1 and M2 is in train this month. (2) The nontransactions component of M2 decelerated in July. MMDAs continued to run off and growth of savings deposits slowed substantially further, as opportunity costs on these more liquid accounts remained considerably wider than in 1986 or early this year. Rates on short-term small time deposits already had moved into closer alignment with market rates in June, and yields on longer-term accounts continued to rise in July as the market yield curve steepened. In response, small time deposits increased at a 12 percent clip in July, a little faster than in June, which ended 13 consecutive months of outflows. -2- KEY MONETARY AGGREGATES (Seasonally adjusted annual rates of growth) QIV '86 to May June July July Money and credit aggregates -10.4 1.8 6.9 1.0 2.8 3.7 5.2 2.0 4.8 10.6 9.8 7.9Pe 9. 7.4 3.2 1.0 7.2 -1.6 8.0 -2.1 8.2 0.5 4.8 7.9 503 478 1190 768 Ml M2 0.3 M3 Domestic nonfinancial debt Bank credit 8 Pe Reserve measures Nonborrowed reserves1 7.8 -8.4 Total reserves 8.2 -13.3 Monetary base 8.7 Memo: (Millions of dollars) Adjustment and seasonal borrowing Excess reserves 1079 pe-Preliminary estimate. 1. Includes "other extended credit" from the Federal Reserve. NOTE: Monthly reserve measures, including excess reserves and borrowing, are calculated by prorating averages for 2-week reserve maintenance periods that overlap months. Reserve data incorporate adjustments for discontinuities associated with implementation of the Monetary Control Act and other regulatory changes to reserve requirements. (3) M3 expanded at only a 2 percent rate in July, considerably below the 7-1/2 percent path set at the last Committee meeting, placing this aggregate just above the bottom of the parallel band associated with its 5-1/2 to 8-1/2 percent 1987 target range. Bank credit was flat last month; with their M2 deposits growing moderately, banks reduced their managed liabilities, including CDs and RPs in M3, and advanced a sizable volume of funds to their foreign branches, which probably contributed to less aggressive bidding for Eurodollar deposits and the decline in this component of M3 as well. At thrifts, on the other hand, overall issuance of large CDs was well maintained in July, although troubled institutions continued to experience runoffs of uninsured deposits. (4) Growth in total debt of domestic nonfinancial sectors slowed in July, largely owing to the disruption to federal financing from the debt ceiling problem. Early in August, however, the bill auction that had been omitted in July was made up, and by mid-August, Treasury financing was back on track with the mid-quarter financing auctions occurring this week for normal settlement on August 17. Total borrowing by nonfinancial businesses appears to have eased somewhat in July; bond issuance remained near the higher June pace, but short-term credit was repaid on balance, with both business loans at banks and commercial paper outstanding registering declines. Tax-exempt bond offerings receded somewhat in July, and in early August both state and local governments and businesses have reduced their long-term borrowing in response to the recent rise in bond yields. In the household sec- tor, mortgage borrowing has ebbed a bit in recent months, although a sharply rising ARM share probably has tended to lessen the effects of higher interest rates. Mortgage lending also has been boosted by the shift from consumer -4credit to home-equity loans, which probably has shaved several percentage points from consumer installment credit growth this year. (5) Total reserves continued to decline in July, but at a re- duced 2 percent annual rate, largely reflecting weakness in transactions deposits and decreases in excess reserves. The monetary base, which was essentially flat in June, expanded at a 4-3/4 percent pace in July. The assumption for adjustment plus seasonal borrowing at the discount window used in constructing the nonborrowed reserve path was maintained at $500 million throughout the intermeeting period. Late in July, in light of slow growth in the monetary aggregates while the dollar was strengthening, the Account Manager was resolving uncertainties about reserve provision so that borrowing would more likely turn out below, rather than above, the path assumption. Most recently, given signs of strength in the economic expansion, continuing concerns about price pressures, and a pickup in money growth, the Manager has returned to a balanced stance of reserve provision. Borrowing for the three reserve maintenance periods ended since the July 7 FOMC meeting has averaged $466 million. (6) The federal funds rate edged off during the intermeeting period to average around 6-5/8 percent recently. Most other private money market rates also moved a little lower, but bill rates backed up once the Treasury was able to complete a full auction schedule and paydowns of bills in weekly auctions slowed from the pace in the first half of the year. In capital markets, yields on Treasury and corporate bonds moved higher through early August, as pressures on oil prices from the Persian Gulf tensions against a backdrop of reasonably robust economic data and uncertain progress on the federal deficit seemed to intensify concerns about inflation and credit -5demands in the future. Following the completion of the mid-quarter refund- ing bond rates have retraced a portion of this rise, but since the last meeting are up on balance by about 25 to 35 basis points. Apparently spurred by optimism about the outlook for profits, however, stock prices soared over the intermeeting period, with major indexes gaining from 6 to 10 percent. (7) The dollar expanded by 1-1/2 percent on balance over the intermeeting period against a weighted average of other G-10 currencies. It rose strongly through much of the period, buoyed by the relative strength of the U.S. economy and the tensions in the Persian Gulf, but subsequently fell back in response to the worse-than-expected June trade figures. The dollar was particularly strong against the mark, perhaps reflecting a sluggish outlook for the German economy, and by late in the intermeeting period the dollar-mark exchange rate had recovered to its early 1987 level. , with U.S. activity coming to $631 million over the intermeeting period, split evenly between the Federal Reserve and the Treasury. . Money market conditions tightened somewhat in Germany and more in the United Kingdom, while remaining unchanged in Japan. Long- term rates rose significantly in all these countries, with the largest rise occurring in Japan amid improved prospects for economic activity as well as concerns about the inflation implications of mid-East tensions. Policy alternatives (8) The table below presents three alternative specifications for monetary growth from June to September, along with associated federal funds rate ranges. (More detailed data, including growth from July to September and from the fourth-quarter base of the long-run ranges to September implied under each alternative, are shown on the table and charts on the following pages.) Alt. A Alt. B Alt. C 5-1/2 5-3/4 5 5 5-1/2 4 4-1/2 5-1/4 3 3 to 7 4 to 8 5 to 9 Growth from June to September M2 M3 M1 Associated federal funds rate range (9) Alternative B is based on retaining $500 million of adjust- ment plus seasonal borrowing as the assumption in constructing reserve paths. Federal funds would be likely to trade mainly in the lower portion of a 6-1/2 to 6-3/4 percent range, except perhaps around the mid-September corporate tax date, when unusually large payments may impart some temporary upward pressure to the funds rate. With no major changes in supply anticipated, at least until the time of the next expiration of the Treasury debt ceiling on September 23, Treasury bill rates now seem broadly consistent with a federal funds rate continuing to average a little above 6-1/2 percent. Likewise, other money market rates generally should vary around current levels under alternative B. Longer-term rates also are most likely to fluctuate near Alternative Levels and Growth Rates for Key Monetary Aggregates M2 M3 ------------------------------------ M1 ------------------------ ------------------------ Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C ------ ------ ------ ------ ------ ------ --- --- - ----- -- -- 2838.2 2839.0 2841.3 2838.2 2839.0 2841.3 2838.2 2839.0 2841.3 3539.1 3553.0 3568.5 3539.1 3553.0 3568.5 3539.1 3553.0 3568.5 750.3 753.1 746.6 750.3 753.1 746.6 750.3 753.1 746.6 2847.9 2863.7 2881.1 2847.9 2863.0 2876.8 2847.9 2862.3 2872.6 3574.4 3597.6 3619.4 3574.4 3596.8 3616.7 3574.4 3596.0 3614.5 747.7 751.3 756.1 747.7 751.1 754.2 747.7 750.9 752.3 5.7 0.3 1.0 5.7 0.3 1.0 5.7 0.3 1.0 5.4 4.7 5.2 5.4 4.7 5.2 5.4 4.7 5.2 17.5 4.5 -10.4 17.5 4.5 -10.4 17.5 4.5 -10.4 , 2.8 6.7 7.3 2.8 6.4 5.8 2.8 6.1 4.3 2.0 7.8 7.3 2.0 7.5 6.6 2.0 7.3 6.2 1.8 5.8 7.7 1.8 5.5 5.0 1.8 5.1 2.2 Quarterly Ave. Growth Rates 10.6 1986 Q3 9.2 Q4 6.3 1987 Q1 2.4 Q2 3.5 Q3 10.6 9.2 6.3 2.4 3.3 10.6 9.2 6.3 2.4 3.0 9.7 8.0 6.4 3.9 4.9 9.7 8.0 6.4 3.9 4.8 9.7 8.0 6.4 3.9 4.7 16.5 17.0 13.1 6.4 0.9 16.5 17.0 13.1 6.4 0.5 16.5 17.0 13.1 6.4 0.2 2.4 5.6 7.0 2.4 5.0 6.1 2.4 4.4 5.2 5.2 5.7 7.6 5.2 5.4 7.1 5.2 5.2 6.7 3.8 5.1 6.7 3.8 4.1 5.2 3.8 3.1 3.7 4.4 4.1 3.9 3.7 4.4 4.4 4.0 3.9 3.7 4.2 4.4 3.9 3.9 3.7 4.1 5.2 5.1 5.2 4.8 5.4 5.2 5.1 5.2 4.8 5.3 5.2 5.0 5.2 4.8 5.2 9.9 6.9 7.6 6.9 6.9 9.9 6.8 7.6 6.9 6.6 9.9 6.6 7.6 6.9 6.3 Levels in billions 1987 April May June July August September Monthly Growth Rates 1987 April May June July August September Mar. 87 to June 87 June 87 to Sept. 87 July 87 to Sept. 87 Q4 Q4 Q4 Q4 Q4 86 86 86 86 86 to to to to to Q2 87 Q3 87 June 87 July 87 Sept. 87 Chart 1 ACTUAL AND TARGETED M2 Billions of dollars 3100 Actual Level * Short Run Alternatives 8.5s - 3050 - 3000 -42950 S.5Z 2900 2850 2800 - I 0 N 1986 I I D I J I I F M I A M I J J 1987 I I A I I 8 0 I N D 2750 2700 Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 3850 Actual Level SShort Run Alternatives 3800 -1 3750 8.5X -1 3700 , 5.5% 1 3650 -H 3600 3550 -13500 I O I N 1986 I D I J I I F M I I A M I J J 1987 I I I A S 3450 - 3400 I I 0 - N 3350 D Chart 3 M1 Billions of dollart 840 Actual Level ........ Growth From Fourth Quarter SShort Run Alternatives - 830 - 820 - 810 ,' /' / 15X ,. S800 - 790 , *' 7 80 0 - ,' / -- 10 /- -,- , ,"' -- -- c S .. .. - 750 - 730 ~720 -- .--- 770 -- 760 - O - - 710 - 700 I 0 - I N D 1986 I J I F I M I A I I M J J 1987 I I A I S I 0 I N 690 680 D Chart 4 DEBT Billions of dollars 8600 -- Actual Level --- Estimated Level 8500 8400 8300 8200 - 82 8100 8000 7900 7800 7700 7600 7500 7400 7300 I 0 II N 1986 II D I I I J . 1I I F M I I I A I M I J J 1987 I i I I I A S I I 0 N 7200 D -8recent levels into the late summer, though they should remain sensitive to developments in the Persian Gulf and other factors bearing on the inflation outlook and the dollar. (10) Under alternative B, and the other alternatives as well, M2 growth is projected to strengthen in August and September relative to the weak expansion of recent months. This pickup would reflect primarily a waning of the damping influence of previous increases in market rates and opportunity costs. Offering rates on very liquid deposits now seem roughly in line with the current levels of short-term market rates; however, some additional upward adjustment in rates on longer-term small time deposits probably can be expected, given recent increases in yields on market instruments of comparable maturity. a bit under this alternative, With opportunity costs unchanged or narrowing growth in M2 over the balance of the quarter is expected to average near 6 percent, around the trend of income. This growth would bring expansion over June to September to the 5 percent shortrun growth path specified by the Committee at its last meeting. its recent weakness, Owing to largely reflecting the earlier widening of opportunity costs, M2 would expand this quarter at only a 3-1/4 percent annual rate on a quarterly average basis. GNP, Given the staff's greenbook projection for nominal M2 velocity would be expected to increase at a 3 percent rate, around the pace of the first half of the year. (11) M3 growth over August and September would be expected to accelerate substantially from its unusually depressed July pace, to a rate of 7 percent under alternative B. boosting issuance of large CDs. Bank credit should resume its expansion, Demand for adjustable rate mortgages likely will continue to support thrift asset growth, funded in part by continued -9- expansion of large CDs, especially if the recent tendency to pull back from reliance on FHLB advances continues. Even with the pickup in M3 growth, this aggregate would fall short of the Committee's current 7-1/2 percent short-run range for June to September by about 2 percentage points. Total debt of nonfinancial sectors is expected to grow in August and September around the more moderate July pace, leaving the debt aggregate in September about 9-1/2 percent at an annual rate above its fourth-quarter base. While federal government borrowing has picked up following the debt ceiling disruption, private credit demands may be damped a bit, especially in long-term credit markets in response to the higher level of bond yields. (12) Moderate increases in M1 also are expected over the balance of the quarter as interest-rate effects recede. Since mid-July, growth of both demand deposit balances and NOW accounts has resumed, and expansion of M1 at a 5-1/4 percent rate is expected on average over August and September under alternative B. But the arithmetic effect of weakness in June and July implies quarterly average growth of less than 1 percent in the current quarter and a velocity increase of almost 6 percent, the largest advance since early 1984. (13) With respect to the long-run ranges, M2 growth from the fourth quarter to September is expected to come to only 4-1/4 percent under alternative B. Expansion at around an 11-1/2 percent rate over September to December would be required to hit the lower end of the long-run range in the fourth quarter; 9-1/2 percent growth would be needed to bring this aggregate to the lower end of its growth cone in December. While a further strengthen- ing of M2 growth is possible over the fourth quarter should some of the unusual weakness of earlier this year be reversed, an acceleration of this -10- magnitude would seem unlikely without a very substantial decline in interest rates by early in the fourth quarter. M3 growth from its fourth-quarter base would be at a 5-1/4 percent rate by September under alternative B. With moderate increases in bank and thrift credit projected, this aggregate is likely to climb to within the lower portion of its range in the fourth quarter, even if interest rates moved a little higher in the latter part of the year, as in the staff forecast. Nonfinancial debt is still expected to grow 9-1/2 percent in 1987 on a quarterly average basis, in the middle of its 8 to 11 percent range. Growth of M1 from the fourth quarter of 1986 to September is projected at 6-1/2 percent under alternative B; with rates remaining close to current levels under this alternative through the third quarter, M1 growth for the year is not likely to differ very much from its growth through September. (14) Alternative A assumes adjustment plus seasonal borrowing of $300 million would be used to construct reserve paths. The federal funds rate would fall to within a 6 to 6-1/4 percent range, probably gravitating toward the lower end once the market perceived the extent of the easing of reserve pressures. Other short-term rates would follow suit, with the 3- month Treasury bill rate probably slipping to around 5-1/2 percent. Given the easing of reserve pressures under this alternative, against the background of recent signs of monetary policy firming in some other major industrial countries, the dollar probably would come under renewed downward pressure. Bond market participants, recently preoccupied with inflationary con- cerns, might react negatively to a less restrictive stance of Federal Reserve policy, especially should it be accompanied by a substantial weakening of the dollar. In such circumstances, bond yields might not fall much, if at all, over the intermeeting period, absent a sharp break in oil prices. -11(15) Owing to the decline of short-term market interest rates relative to offering rates on deposits, M2 growth under alternative A would be expected to jump to 7 percent over August and September. Its M1 component likely would accelerate to a 6-3/4 percent rate over the two months. Growth of M2 would move noticeably closer to its long-term range, but in September this aggregate still would have increased at only a 4-1/2 percent annual rate from its fourth-quarter base. While the easing contemplated under this alternative probably would have a pronounced effect on money growth in the fourth quarter, whether M2 could hit the 5-1/2 percent lower bound of its range without a further easing is uncertain. To make up the shortfall, a 10-1/2 percent September-to-December growth rate would be needed (or 8-3/4 percent to hit the bottom of the growth cone by December). For M3, the 7-1/2 percent growth foreseen for August and September under alternative A would lift this aggregate to around the lower bound of its annual range. Prospects would be good that the aggregate would move well within its range in the fourth quarter; the steeper yield curve expected under this alternative would provide additional incentives for businesses to focus credit demands on banks and for home mortgage credit to be met through ARMs at thrifts. (16) Alternative C assumes an increase in the reserve path allow- ance for discount window borrowing to $700 million. Federal funds probably would trade in a 7 to 7-1/4 percent range and bill rates would move commensurately higher. A near-term firming of monetary policy does not now seem widely anticipated and long-term rates probably would tend to rise under this alternative. However, any such backup might be limited if such a policy action were seen as indicative of continued Federal Reserve commitment to restraining inflation. The dollar's recent firmness in exchange markets would be more likely to persist, at least for a time. -12(17) The backup in short-term market rates under alternative C, together with lagging returns on deposits, would widen opportunity costs of holding liquid monetary assets. Expansion of M2 over August and September would be expected to average 5-1/4 percent, bringing growth from the fourth quarter through September to around 4 percent. of the rise in much in Given the continuing effects interest rates, this aggregate would be unlikely to accelerate the fourth quarter. The 6-3/4 percent growth anticipated for M3 over the last two months of this quarter would imply that growth of this aggregate from the fourth quarter base to September would be around 1/4 percentage point below the lower limit of its 1987 range. Even so, this aggregate could climb to the lower end of its range in the fourth quarter, assuming continued moderate expansion of assets at depository institutions. M1 might expand at only a 3 percent rate from June to September under this alternative, with growth for the year decelerating further to 6-1/4 percent by September, and dropping noticeably below 6 percent for the year. -13- Directive language (18) options for alternative specifications of reserve pressures, low for Committee consideration. adjustments, with the usual Draft language for the operational paragraph, is presented be- With regard to the language on intermeeting the draft provides for the usual options regarding the symmetry or asymmetry of such adjustments with appropriate use of "would" or "might," and "somewhat" or "slightly". If the Committee wished to change the implicit weighting of the various factors conditioning intermeeting reserve adjustments, shift or delete the language in the first if two sets of brackets. could For example, the Committee wished to retain the current added emphasis on resisting inflation but to reduce that on the dollar in it it light of its recent strength, might shift the "as well as" expression to before the reference to the foreign exchange market. Alternatively, it could delete the language in both brackets to give the various factors more equal weight. The language in the third set of brackets is suggested should the Committee wish to indicate that somewhat faster growth in M2 and M3 than currently expected would be acceptable, under certain conditions, given their shortfall from the long-run ranges, which would be expected to persist through the third quarter under any of the alternatives. OPERATIONAL PARAGRAPH 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 reserve positions. Somewhat (SLIGHTLY) greater reserve restraint (WOULD/MIGHT), (SLIGHTLY) lesser reserve restraint would (MIGHT), or somewhat be acceptable depending -14- on indications of inflationary pressures [and on] developments in foreign exchange markets, [as well as] the behavior of the aggregates and the strength of the business expansion. This approach is expected to be consistent with growth in M2 and M3 over the period from June through September at annual 7-1/2] ____ percent, respectively. rates around 5 ____ and [DEL: [SOMEWHAT FASTER GROWTH IN THE BROAD AGGREGATES WOULD BE ACCEPTABLE IN THE ABSENCE OF INDICATIONS OF WORSENING PRICE PRESSURES AND SUBSTANTIAL WEAKNESS IN THE DOLLAR, GIVEN THE SHORTFALL OF THESE AGGREGATES FROM THEIR ANNUAL RANGES.] Growth in M1, while picking up from recent levels, is expected to remain well below its pace during 1986. The Chairman 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 4 to 8] ____ TO ____ a federal funds rate persistently outside a range of [DEL: percent. Selected Interest Rates Percent August 17, Short-term federal funds Period *1 - 1 ury bsllCDa Tr bills Treasury econdary market 3month I -monh I 1-yar 1 2 I 3 I 4 money comm. pcommr market sondary mutual paper fund -month 3-month 1 5 1 6 7 ~I_ I bank prime foa 8 L I- U.S. government constant constant S government arturty yil 3year 10-year 30-year 9 10 I 11 Long-Term corporate corporate municipal Bondd A utility B recently offered Buyer I 12 1 13 1987 conventional home mortgages sconvantional homeota secondary ar im pr ary m ket market fixed-rae fixed rate ARM ~ 1t4 15 1 16 1986--Righ Low 9.55 5.75 7.21 5.09 7.30 5.16 7.35 5.32 7.94 5.47 8.60 6.24 9.38 7.02 9.52 7.16 10.83 9.03 10.97 9.31 10.99 9.30 9.09 7.62 1987--High Low 7.62 5.95 5.98 5.33 6.20 5.36 6.72 5.40 7.15 5.83 8.19 6.37 8.78 7.03 8.95 7.34 10.45 8.79 10.80 8.97 10.81 9.03 8.01 7.47 Monthly 1987 July Aug. Sep. Oct. Nov. Dec. 1987--Jan. Feb. Mar. Apr. May June July 6.56 6.17 5.89 5.85 6.04 6.91 6.43 6.10 6.13 6.37 6.85 6.73 6.58 5.83 5.53 5.21 5.18 5.35 5.53 5.43 5.59 5.59 5.64 5.66 5.67 5.69 5.86 5.55 5.35 5.26 5.41 5.55 5.44 5.59 5.60 5.90 6.05 5.99 5.76 5.90 5.60 5.45 5.41 5.48 5.55 5.46 5.63 5.68 6.09 6.52 6.35 6.24 6.37 5.92 5.71 5.69 5.76 6.04 5.87 6.10 6.17 6.52 6.99 6.94 6.70 6.02 5.74 5.34 5.22 5.21 5.45 5.50 5.32 5.32 5.49 5.79 6.01 8.25 6.86 6.49 6.62 6.56 6.46 6.43 6.41 6.56 6.58 7.32 8.02 7.82 7.74 7.30 7.17 7.45 7.43 7.25 7.11 7.08 7.25 7.25 8.02 8.61 8.40 8.45 7.27 7.33 7.62 7.70 7.52 7.37 7.39 7.54 7.55 8.25 8.78 8.57 8.64 9.57 9.51 9.56 9.48 9.31 9.08 8.92 8.82 8.84 9.51 10.05 10.05 10.17 10.18 9.82 9.98 9.82 9.56 9.34 9.15 9.04 9.01 10.05 10.58 10.38 10.20 10.51 10.20 10.01 9.97 9.70 9.31 9.23 9.12 9.08 9.83 10.60 10.54 10.28 8.52 8.40 8.20 8.06 7.90 7.68 7.62 7.56 7.54 7.58 7.88 7.93 7.81 Weekly 8.16 7.90 7.50 7.50 7.50 7.50 7.50 7.50 7.50 7.75 8.14 8.25 - May 6 13 20 27 7.30 6.75 6.77 6.80 5.62 5.57 5.80 5.61 5.97 5.84 6.20 6.15 6.35 6.41 6.72 6.57 6.85 6.85 7.10 7.15 5.62 5.75 5.78 5.88 7.96 8.00 8.21 8.25 7.80 7.90 8.19 8.16 8.42 8.52 8.78 8.70 8.63 8.69 8.93 8.86 9.87 10.10 10.27 10.05 10.39 10.73 10.83 10.58 10.52 10.48 10.81 10.70 7.85 7.87 7.99 8.01 June 3 10 17 24 6.65 6.70 6.75 6.79 5.69 5.60 5.60 5.70 6.15 5.95 5.92 5.97 6.44 6.41 6.30 6.30 7.01 6.99 6.90 6.89 5.93 5.97 6.01 6.04 8.25 8.25 8.25 8.25 8.01 7.95 7.73 7.69 8.57 8.55 8.33 8.27 8.74 8.71 8.51 8.44 10.14 10.04 10.00 10.03 10.56 10.38 10.28 10.28 10.70 10.66 10.44 10.35 7.97 7.97 7.91 7.88 July 1 8 15 22 29 6.61 6.64 6.52 6.57 6.63 5.73 5.63 5.59 5.61 5.79 5.99 5.65 5.52 5.69 6.01 6.29 6.22 6.13 6.18 6.37 6.92 6.76 6.68 6.63 6.70 6.04 6.06 6.05 6.01 5.95 8.25 8.25 8.25 8.25 8.25 7.76 7.65 7.65 7.70 7.86 8.34 8.30 8.37 8.44 8.59 8.48 8.43 8.53 8.65 8.84 10.01 10.07 10.12 10.34 10.44 10.20 10.18 10.13 10.23 10.28 10.36 10.30 10.23 10.23 10.27 7.86 7.86 7.81 7.77 7.75 6.75 6.58 5.98 5.88 6.13 6.07 6.46 6.48 6.76 6.72 5.99 6.00 8.25 8.25 8.01 7.98 8.72 8.72 8.95 8.95 10.45 10.36 10.27 10.35 10.34 7.73 7.78 6.57 6.67 6.74p 5.85 5.96 5.96 6.08 6.01 6.04 6.51 6.43 b.45 6.78 6.69 6.69 8.25 8.25 8.25 7.99 7.90 7.86p 8.70 8.63 8.57p 8.93 8.85 8.77p Aug. Aug. 5 12 Daily Aug 7 Aug. 13 Aug. 14 -- NOTE: Weekly data for columns 1 through 11 are statement week averages. Data in column 7 are taken from Donoghue's Money Fund Report. Columns 12 and 13 are 1-day quotes for Friday and Thursday, respectively, following the end of the statement week. Column 13 is the Bond Buyer revenue index. Column 141s the FNMA purchase yield, plus loan servicing fee, on 30-day mandatory delivery commitments on the Friday following the end of the statement week. Column 15 Is the average contract rate on new commitments for fixed rate mortl 10.24 gages (FRMs) with 80 percent loan to-value ratios at a sample of savings and loans Column 16 is the average initial contract rate on new commitments for one-year, adjustable-rate mortgages (ARMs) at SALs offering both FRMs and ARMs with the same number of discount points. FR 1367 (121865 Strictly Confidential (FR)- cass Money and Credit Aggregate Measures FO4C Seasonally adjusted AUi. Period M1 1 M2 Money stock measures and liquid assets nontransactions components in M n M3 only i -Y M -7 [;, 3 2 r L M3 4 5 i 6 Bank credit Stoal loans and investments' 7 IJ7 Domestic nonfinancial debt 2 IUS Itotalz other 2 government 2 8--I 9-i1 PERCENT ANNUAL GBOWTI; ANMUALLI (0I1 TO UIV) 1984 1985 1986 5.4 12.1 15.3 7.9 8. 8.9 8.6 7.8 6.9 23.2 3.4 8.4 10.7 7.7 8. 8 12.2 8.5 8.1 11.2 10.2 9.8 16.0 15.3 13.4 12.9 14.1 12.7 QUAITERLI AVBBAGE 380 UTH. 1986 1986 4TH QTH. 1987 1ST QTB. 1987 2ND UTR. 16.5 17.0 13.1 6.4 10.6 9.2 6.3 2.4 8.6 6.6 4.0 0.9 6.2 3.2 6.4 10.3 9.7 8.0 6.4 3.9 8.1 8.2 6.4 3.1 10.6 8.8 10.1 14.7 11.9 11.5 12.3 10.6 9.1 16.4 18.4 10.7 14.4 18.8 30.5 11.8 11.0 7.9 10.7 6.4 10.7 10.3 8.4 7.0 9.5 2.2 3.8 7.0 6.9 12.9 -7.4 5.5 7.7 10.9 10.2 8.9 7.1 6.2 10. 1 8.0 8.7 8.7 7.6 7.6 9.5 12.2 14.8 12.7 A-.6 6.4 15.0 11.0 -0.5 3.4 17.5 4.5 -10.4 1.8 9.5 -0.3 1.4 5.7 0.J 1.0 2.8 8.6 -0.3 0.7 1.6 -1. 1 5. 1 3.2 6.3 7.4 2.6 4.3 22.6 21.8 -1.0 8.8 1.2 1.6 5.4 4.7 5.2 2.0 739.5 750.3 753.1 746.6 747.7 2824.7 2838.2 2839.0 2841.3 2847.9 2085. 2 2087. 9 2085.9 2094.7 2100.2 IBOTHLI 1986--JULT AUG. SEPT. OCT. NOV. DEC. 1987--JAN. APIL BAY JUNE JULY P MONTHLY LEVELS 1987--HAL AP5. BAI JULT P AUG. 1/ 2/ 9.6 2.4 -2.9 3.9 9.2 1.4 16.1 0.9 3.8 11.9 4172.4 4186.0 4218.0 4222.8 2126.2 2147.3 2160.6 2166b. 7.4 3.2 1.0 9.7 9.5 13.8 10.0 10.8 7.2 14.4 20.0 10.2 15.2 14.3 9.7 11.0 14.7 .0 -- 13.9 1J.4 13.2 12.5 12.1 10.4 9.2 11.1 14.0 13.5 9.1 11.8 16.0 11.2 5.7 9.0 10.4 9.3 8.3 9.0 10.2 5.1 1828.2 1841.1 5952.5 1864.2 6050.3 6092.1 6137.9 7780.7 7845.1 7914.6 7979.5 8032.3 6.8 3.0 5. 9 8.5 15.1 14.9 4.5 8.3 9.9 10.6 9.8 7.9 ($BILLIONS) JUNE MEBKLY LEVELS 1987-JOLI 6 13 7.0 1987 698.4 700.9 714.1 727. 1 726.5 3523. 1 3539. 1 3553.0 3568.5 3574. 4 2168.1 I887.4 1894.4 6004.0 ($BILLIONS) 750.3 743.5 20 27 P 748.U 749.2 J P 751.8 CONTIENNTAL ILLINOIS NATIONAL BANK TO THE FDIC ANNUAL BATES FOR UANK CREDIT ABE ADJUSTED POU A IMANSFER OF LOANS PFRO 19Y4. 26, BGINNING SEPTEMBUE l AVERAGING END-OF-HONTH LEVELS OF ADJACENT MONTHS, AND HAVE BEEN ADJUSTED DBUT DATA ARE ON A MONTHLY AVERAGE BASIS, UEBIVEDU TO BEHOVE DISCONTINUITIES. P-PBELININABY Components of Money Stock and Related Measures Billions of dollars, seasonally adjusted unless otherwise noted AUG. Period Currency Other Overnight Demand checkable RPs and deposits deposits Eurodotlars NSA Small Money market denoml mutual funds, NSA nation general Institu time purpose, tions deposits' and broker only MMDAs NSA Savings deposits 5 6 7 8 17, 1987 Large denomination time 3 deposits Term RPs NSA Term Eurodollars NSA Savings bonds 10 11 12 13 14 15 1 Shortterm Commer Treasury clal paper securities Bankers acceplances dealer 2 4 9 1 2 3 157.8 169.7 182.4 246.6 268.6 299.8 143.9 175.9 226.1 56.1 67.2 77.1 405.4 509.2 568.2 290.5 301.9 358.4 880.0 880.3 858.4 161.7 176.6 207.2 57.7 64.7 84.3 413.6 433.3 446.1 65.3 b63.0 80.8 81.7 77.6 80.1 13.9 7u.9 89.7 267.3 295.7 290.4 161.2 201.7 229.0 45.7 43.2 37.7 177.6 179.0 179.7 288.2 291.2 292.2 204.5 210.4 214.7 71.9 74.7 72.7 546.6 553.6 558.8 327.4 334.6 341.4 880.9 876.7 872.2 199.7 200.5 202.2 77.5 80.8 84.4 448.3 449.4 448.4 74.4 75.2 77.9 78.3 78.0 81.4 84.3 85.3 86.4 292.6 288.7 287.9 214.5 219.7 223.9 39.0 37.3 36.9 181.2 182.4 183.5 293.4 297.8 308.3 220.3 225.8 232.3 77.4 76.7 77.3 564.4 568.7 571.4 350.5 358.5 366.3 864.7 857.1 853.5 206.9 207.1 207.6 84.5 84.0 84.1 445.5 445.8 447.1 78.0 82.4 82.0 78.0 79.3 83.0 87.7 89.8 91.7 286.7 292.2 292.4 228.4 228.4 230.2 37.7 38.0 37.5 186.0 187.2 187.7 305.) 300.8 299.3 240.1 242.9 245.7 83.5 78.7 75.3 578.3 570.8 570.6 376.7 387.2 396.3 851.6 848.3 845.9 209.0 210.7 211.6 84.0 84.7 84.9 449.7 448.2 450.1 81.2 84.9 84.9 84.8 87.6 88.2 92.7 93.5 94.3 289.3 291.7 276.1 239.7 239.8 239.1 37.8 39.3 39.8 JUyE 188.9 190.2 191.1 303.9 303.9 297.4 250.7 252.2 251.2 75.1 74.2 73.4 565.5 557.1 553.5 406.1 411.7 415.2 843.9 843.3 850.4 211.0 209.1 210.2 83.1 81.8 81.3 454.6 459.7 465.1 91.0 96.4 98.4 84.1 87.6 90.3 95.1 95.9 96.5 265.8 272.4 265.6 244.9 254.3 248.8 41.2 42.4 43.5 JULI P 192.1 296.3 252.5 74.0 548.1 416.8 858.9 210.4 83.4 464.9 96.5 86.8 ANNUALLI(4T8 1984 1985 1986 QTR): IIOTHUL 1986-JULT AUG. SPIT. OCT. IoI. DBC. 1987-JAM. EBB. RAm. APE. 8Ai 1/ 2/ 3/ INCLUDES RETAIL BBPOURCASE AGRBIBEMTS. ALL IRA AND1KOGrACCOUNTS At CONHIBCIAL BANKS 1AN THRIFT INSTITUTIONS ANN SUBTRACTED P808 SSALL TIBE DEPOSITS. EXCLUDBS IRA AND KBOGH ACCOONTS. NIT OF LARGE DE10NINATION TIRE DEPOSITS RELD 1O80811 ARaKET IOTUAL FODS AND TIFIT INSTITUTIONS. P-PB1E18 IIMAB STRIC1LY CONFIDENTIAL IFH) CLASS II-FOMC Net Changes in System Holdings of Securities' Millions of dollars, not seasonally adjusted August 17, 1987 Treasury bills Period net change' 5,337 5,698 13,068 3,779 14,596 19,099 1981 1982 1983 1984 1985 1986 14ear 1,702 294 312 484 826 1,349 190 1,702 1,794 1,896 1,938 2,185 893 S1-5 5-10 33 393 over 1 39 379 307 383 441 293 158 -2,821 7,585 4,668 9,668 190 893 236 158 1987--QTR. I qrR. II -2,714 5,823 1,767 -252 5,036 1,226 920 1987--Jan. Feb. Mar. Apr. May June July 414 -4,189 1,062 3,573 1,697 553 -4,909 1986--QTR. May June I II III IV 1,232 3,642 914 669 535 1,394 -200 312 251 2,768 2,803 3,653 3,440 4,185 1,476 within 1-year 133 15 10 _ 360 . _ - over t _ - L total 494 684 1,461 -5,445 1,450 3,001 10,033 1,476 -2,861 7,535 4,577 10,927 -3,580 -356 4,044 9,925 - -252 8,948 -3,676 14,735 -14,254 2,121 - -252 304 -4,441 1,062 9,993 1,697 3,044 -5,168 -10,701 -4,723 1,170 15,801 -16,634 2,954 906 975 78 15,104 11,595 6,457 2,491 -200 - 1,427 446 141 47 3 10 17 24 29 334 185 27 29 334 185 2,518 5 12 176 LEVEL--Aug. 12 ($ billions) 103.3 535 - -75 -125 - -- 22.4 251 1,394 5 41.0 -- 14.7 Net RPs* 8.491 8,312 16,342 6,964 18,619 20,178 1,427 446 141 47 -268 -306 -246 -714 -3,512 Aug. -252 total Net change outright holdings total' 6 13 20 27 1 8 15 22 29 July Federal agencies net purchases' Treasury coupons net purchases' 2,491 ------- -75 -125 -- 5 24.3 I. Change from end-ofperiod 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 shilts. 102.4 2.3 3.7 1.3 .3 7.6 - - 11,981 2,247 3,632 4,236 -268 -381 -371 -773 -3,512 -7,511 857 -2,249 2,484 578 181 604 -1,392 216.8 -3.5 5. In addition to the net purchase of securities, also reflects changes in System holdings of bankers' acceptances, direct Treasury borrowing from the System and redemptions (-) ol agency and Treasury coupon issues 6 Includes changes in RPs ( +), matched sale-purchase transactions (-), and matched purchase sale transactions ( ) 

Federal Reserve (1987, August 17). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19870818

@misc{wtfs_bluebook_19870818,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1987},
  month = {Aug},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19870818},
  note = {Retrieved via When the Fed Speaks corpus}
}