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. November 9, 1989 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 STRICTLY CONFIDENTIAL (FR) CLASS I - FOMC November 9, 1989 MONETARY POLICY ALTERNATIVES Recent Developments (1) In light of information suggesting added risk of a pronounced weakening in the economic expansion, pressures on reserve markets were eased in two separate steps during the intermeeting period. 1 The federal funds rate, which was a bit above 9 percent at the time of the October meeting, is currently around 8-1/2 percent. The borrowing objective was reduced in stages from $550 million at the time of the last FOMC meeting to $250 million, reflecting declines totaling $100 million to effect the easing of policy and $200 million to take account of trends in seasonal borrowing. (Seasonal credit has continued to drop steeply, from $430 million immediately preceding the FOMC meeting to $160 million in the first week of the current maintenance period.) Borrowing was boosted over the long Columbus Day weekend and ran above its allowance for the first maintenance period. Since then, however, borrowing has generally come in below the reduced path allowances, and is running at $185 million through the first week of this maintenance period. (2) The easing of policy--only a portion of which had been anticipated by the market--and evidence of a sluggish economy caused market participants to mark down their expectations of interest rates for some time into the future. Thus, not only did most short-term rates 1. In addition, the Trading Desk took an accommodative approach to supplying reserves in the days immediately after the steep drop in stock prices on October 13, as financial markets remained skittish and volatile for a time. decline roughly in line with the 1/2 point drop in the federal funds rate, but rates on one-year Treasury bills and Treasury notes fell by similar amounts; bond yields dropped somewhat less. Disruptions to bill auctions and pressures arising from substantial incoming supplies of cash-management bills limited the declines in short-term Treasury bill rates: for example, rates on 3-month Treasury bills are about unchanged over the intermeeting period. Rates on fixed-rate mortgages in both primary and secondary markets fell about in line with Treasury bond yields. (3) The generally rising prices elsewhere in financial markets were not apparent in the equity and junk bond sectors. Amid growing indications of a softer economy and declining corporate profits, as well as difficulties of previously restructured firms, investors began questioning the earnings and cash-flow projections underpinning highly leveraged financing and equity valuation. Evidence that financing for share buyouts would be less readily available helped to precipitate a sharp decline in stock prices on October 13, just days after stock price indexes set new highs. An initial, partial recovery of stock prices was subse- quently reversed, leaving most averages more than 5 percent lower over the intermeeting period. In the junk bond market, lower quality issues suf- fered the deepest losses, and average spreads versus Treasury yields widened further from the record levels seen in September. (4) The weighted average value of the dollar in terms of other G-10 currencies declined about 1-1/4 percent over the intermeeting period. The dollar was generally buoyant early in the period, despite and a round of official interest rate increases in Europe. The dollar reached its high on October 11, the day the Bank of Japan raised its discount rate. stock market drop, the dollar moved lower. Following the October 13 Market expectations of further interest rate hikes abroad, along with additional easing by the Federal Reserve, contributed to this softness. The continued volatility of stock prices and more general concerns about financial fragility may have helped push gold prices to their highest levels since midsummer. Desk sales totaled $1.2 billion against marks and yen, all in the first ten days of the period. (5) Growth of all three monetary aggregates picked up in October. M2 expanded at an 8 percent rate last month, above the 6-1/2 percent growth rate specified by the Committee for the September-to-December period, as M1 growth jumped to a 10 percent rate. A surge in demand deposits early in October--perhaps as compensating balances adjusted to earlier rate declines--contributed to the unanticipated strength. Growth of the retail-type components of M2 slowed from their average pace in August and September, consistent with waning effects of earlier declines in interest rates. Money market mutual funds reportedly benefited some- what from shifts out of junk bond funds, but their growth for the month was in line with past experience based on movements in relative interest rates, suggesting that the unusual shifts did not add a great deal to overall M2 growth. Since the fourth quarter of last year, M2 has increased at a 4-1/4 percent rate and stands in the lower half of its 1989 target range. (6) M3 expanded at a 4-1/4 percent rate in October, well above the pace of the preceding two months, and close to the Committee's expected growth rate of 4-1/2 percent from September to December. credit expansion strengthened substantially in October. Bank Although a por- tion of this was financed by M2 deposit transfers from failed thrifts arranged by RTC, banks also turned to issuance of large CDs, boosting M3 growth. Asset runoffs at capital-deficient thrifts and associated declines in RPs and large CDs seem to have depressed M3 growth about as much as they had in August and September. (7) Partial data suggest that nonfinancial debt grew at around an 8 percent rate in October, about maintaining the pace of the third quarter and keeping this aggregate in the middle of its monitoring range. Busi- ness debt growth apparently picked up last month, despite a dropoff in equity retirements. Lower yields sparked a strengthening of corporate bond issuance, while shorter-term business borrowing was little changed, as a falloff in commercial paper issuance about offset faster C&I lending by banks. In the household sector, data on consumer credit indicated no growth in September, but this weakness may reflect difficulties in seasonal adjustment; consumer lending by banks, adjusted for securitization, expanded at about a 10 percent rate in both September and October. Real estate lending at commercial banks slowed a little in October from the brisk pace of September, but issuance of pass-through securities by federal agencies remained robust. MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) August September Octoberpe QIV'88 to Octoberpe Money and credit aggregates M1 0.8 5.7 10 M2 7.2 7.5 8 4-1/4 M3 2.2 0.9 4-1/4 3-3/4 Domestic nonfinancial debt 9.5 8.4 8 8-1/4 Bank credit 7.7 6.2 14-1/2 7-1/2 Nonborrowed reserves 1 0.2 8.9 11-1/2 -2-1/4 Total reserves 1.1 9.6 8-1/2 Monetary base 1.3 7.4 3 633 671 534 885 938 1031 0 Reserve measures Memo: -2 3-1/4 (Millions of dollars) Adjustment plus seasonal borrowing Excess reserves 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 two-week reserve maintenance periods that overlap months. -6- Policy Alternatives (8) Two alternatives are presented below for Committee consideration. In alternative B, federal funds would continue to trade around 8-1/2 percent, a level expected to be associated with adjustment plus seasonal borrowing of $200 million. In alternative A, a federal funds rate around 8 percent would be accompanied by a borrowing assumption of $100 million. The $100 million difference between the alternatives' borrowing assumptions still seems appropriate in light of the reduced sensitivity of borrowing as it nears frictional levels. Both borrowing levels embody a downward technical adjustment of $50 million from the current $250 million allowance in recognition of recent and anticipated further seasonal declines in seasonal borrowing. Continuing uncertainty about borrowing behavior, however, still appears to justify flexibility in the Desk's approach to the borrowing objective. (9) Market interest rates generally are expected to remain around current levels under the unchanged reserve market conditions of alternative B. The structure of market interest rates appears to embody another slight easing of monetary policy, but most probably not until late this year or early next year. In addition, impressions of a sluggish economy, consistent with data flows likely under the staff forecast, may continue to foster expectations of future policy easing, even if federal funds rates remain near 8-1/2 percent. Unlike most other rates, those on short- term Treasury bills may drop once the large supply of cash management bills is absorbed into portfolios, with the 3-month bill rate moving down toward 7-1/2 percent. The exchange value of the dollar could exhibit -7- little net change over the intermeeting period under alternative B, though any policy tightening abroad may tend to exert downward pressure on the dollar. (10) The 1/2 percentage point reduction in the federal funds rate under alternative A would come sooner and be larger than market participants are now expecting. Rates on other short-term instruments would decline by nearly the same amount, with the 3-month bill rate dropping ultimately toward the 7 percent area. In response to the further narrow- ing of differentials between U.S. and foreign interest rates, the exchange value of the dollar could be expected to adjust downward. Bond yields probably would decline noticeably under alternative A; market participants may interpret an immediate further easing as suggesting a more aggressive policy posture by the Federal Reserve, and perhaps an assessment of substantial underlying weakening in the economy. However, should incoming data show the economy continuing to advance at its recent pace over coming months, in the context of a weaker dollar, the cumulative effect of past easing measures and alternative A over a short time might be viewed as setting the stage for a subsequent strengthening of the economy, raising questions about prospects for prices. (11) Anticipated growth of the monetary aggregates under the two alternatives is shown in the table below. (More detailed data appear in the table and charts on the following pages.) Under either alternative, M2 and M3 are projected to finish the year within their annual ranges, with M2 near the midpoint of its range and M3 somewhat above the lower bound of its range. -8- Alt. A Alt. B 8 4-3/4 8 7-1/2 4-1/2 7-1/2 4-1/2 3-3/4 1/2 4-1/2 3-3/4 1/2 6 to 10 7 to 11 Growth from September to December M2 M3 M1 Implied growth from Q4'88 to Q4'89 M2 M3 M1 Associated federal funds rate range (12) Even under the unchanged interest rates of alternative B, M2 growth would remain close to last month's brisk pace, buoyed by recent declines in market interest rates and opportunity costs. Under this alternative, M2 is expected to expand at a 7-1/4 percent average annual rate in November and December; growth from September to December and on a fourth-quarter average basis would be 7-1/2 percent. This combines with the staff's nominal GNP projection of 5 percent for the quarter to imply a 2-1/2 percent rate of decline in M2 velocity, roughly consistent with model-based forecasts incorporating the recent reductions in opportunity costs. M1 is projected to slow to a 6-1/4 percent rate in the last two months of the year from the elevated pace of October. 2 Representing a partial offset, however, inflows to nontransaction retail deposits are seen as strengthening somewhat this month and next, as the effects of the recent policy easings take hold. 2. This projection includes a strengthening in demand deposits in December, reflecting an expected need to adjust compensating balances upward before closing the books on 1989, as a consequence of interest rate declines this quarter. Such year-end adjustments have occurred in several recent years. Alternative Levels and Growth Rates for Key Monetary Aggregates M1 M3 M2 Alt. A Alt. B Alt. A Alt. B Alt. A 3117.6 3136.4 3156.0 3117.6 3136.4 3156.0 4003.3 4010.6 4013.5 4003.3 4010.6 4013.5 777.2 777.7 781.4 777.2 777.7 781.4 3176.9 3198.1 3219.3 3176.9 3197.0 3215.6 4027.7 4044.1 4061.3 4027.7 4043.5 4059.3 787.9 791.9 797.1 787.9 791.5 796.1 11.5 7.2 7.5 11.5 7.2 7.5 9.0 2.2 0.9 9.0 2.2 0.9 10.7 0.8 5.7 10.7 0.8 5.7 7.9 8.0 8.0 7.9 7.6 7.0 4.2 4.9 5.1 4.2 4.7 4.7 10.0 6.1 7.9 10.0 5.5 7.0 Quarterly Ave. Growth Rates 1988 Q4 1989 Q1 Q2 Q3 Q4 3.6 1.8 1.2 7.3 7.8 3.6 1.8 1.2 7.3 7.6 4.8 3.7 2.9 4.7 3.5 4.8 3.7 2.9 4.7 3.4 2.3 -0.4 -5.6 1.7 6.9 2.3 -0.4 -5.6 1.7 6.7 Sept 89 to Dec. 89 Oct. 89 to Dec. 89 8.0 8.0 7.5 7.3 4.8 5.0 4.6 4.7 8.0 7.0 7.5 6.3 3.5 4.6 3.9 4.3 4.9 3.5 4.6 3.9 4.3 4.8 3.8 3.8 3.6 3.7 3.9 3.8 3.8 3.6 3.7 3.8 -1.5 0.6 -0.9 0.1 1.1 -1.5 0.6 -0.9 0.1 1.0 Levels in billions 1989 July August September October November December Monthly Growth Rates 1989 July August September October November December Q4 Q4 Q4 Q4 Q4 88 88 88 88 88 to to to to to Q3 89 Q4 89 Sept 89 Oct. 89 Dec. 89 1989 Target Ranges: 3.0 to 7.0 3.5 to 7.5 Alt. B Chart 1 ACTUAL AND TARGETED M2 Billions of dollars 3300 -- Actual Level - Estimated Level * Short-Run Alternatives -4 3250 -4 3200 / ^' / 49 ,- 3% j ,, -1 3150 - 3100 -- 3050 -4 3000 I O I N D 1988 II I I I I J F M I I I I I A M I I J J 1989 I I I I A S I I O N 2950 D J 1990 Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 4250 Actual Level - - - Estimated Level * Short-Run Alternatives 4200 4150 4100 4050 4000 3950 3900 3850 0 N D 1988 J F M A M J J 1989 A S 0 N D J 1990 3800 Chart 3 M1 Billions of dollars Actual Level -- Estimated Level ------ Growth From Fourth Quarter , * Short-Run Alternatives S5% / 830 - 820 -- 810 -- 800 S790 S0% / 780 770 S -- 760 750 -5% I I O I I D N 1988 nI I I I J F I I 11 I I M A I I M J I I A J 1989 S I O I N 740 D J 199 0 Chart 4 DEBT Billions of dollars 10.5% - --- Actual Level Estimated Level * Projected Level I -4 10000 -1 9750 6.5% -- 9500 9250 9000 I O I N 1988 I D I J I F I M I A I I M J I J 1989 I A I S I O I N 8750 D J 1990 -10- (13) M3 growth under alternative B will continue to be damped by the ongoing shedding of assets by undercapitalized S&Ls and by funds supplied through RTC resolutions. However, M3 is expected to grow in November and December a bit faster than in October, leaving expansion over the last three months of the year at a 4-1/2 percent rate. The pace of decline in S&L assets is expected to wane a little over the next two months from the extremely rapid pace of the last few months, and RTC resolutions should slow after the fiscal year-end spurt. As a consequence, outflows of large time deposits and term RPs at thrifts should abate somewhat. Commercial bank credit is likely to slow but expansion of managed liabilities will be maintained, in part to compensate for reduced RTC funds of thrift deposit transfers. Growth of domestic nonfinancial debt is expected to moderate to around 7 percent over the rest of the year, owing mainly to a slowing of federal government debt. This would leave the debt aggregate in the fourth quarter 8-1/4 percent above its year-earlier level, close to the midpoint of its monitoring range. (14) Under alternative A, growth of M2 and M3 through December would be boosted slightly by the associated decline in market interest rates and easing of lending conditions. September-to-December M2 and M3 growth would rise to 8 and 4-3/4 percent rates, respectively. (15) The recent easing, which would be maintained under alternative B, and any additional easing under alternative A, would have important effects on money growth in the first quarter of next year. Under alternative B, M2 would expand around the 7 percent upper limit of its -11tentative range in the early months of 1990. Alternative A likely would yield M2 growth noticeably above the upper end of the tentative growth cone, though well within the parallel lines. Under either alternative, M3 would grow in the lower half of the 3-1/2 to 7-1/2 tentative range for this aggregate. -12- Directive Language (16) Draft language for the operational paragraph, including the standard options and updating, is shown below. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to DECREASE SOMEWHAT(SLIGHTLY)/ maintain/ INCREASE SOMEWHAT (SLIGHTLY) the existing degree of pressure on reserve positions. Taking account of progress toward price stability, the strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets, slightly (SOMEWHAT) greater reserve restraint might (WOULD) or slightly (SOMEWHAT) lesser reserve restraint (MIGHT) would be acceptable in the intermeeting period. The contemplated reserve conditions are expected to be consistent with growth of M2 and M3 over the period from September through December at annual rates of about ____[DEL: 6-1/2]and ____ [DEL: percent, 4-1/2] respectively. 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 a federal funds rate persistently outside a range of ____ TO ____7 to [DEL: 11]percent. November 13. 1989 SELECTED INTEREST RATES (percernt lmMaMI ledral Twasy bia aMUk I SACn dar mutMI - - 3 i. IMal • - i Ir Cmcmndary Wast comD ba paper ima "mau pile -- 7 US - A agnma conuslin malurly yt$alk I A1 I A &dMy receily 17 i m0mni ommcp Bond 13 a= ecodary mae I 14 ia I y 1 nel i t 88 -- High Low 8.87 6.38 8.16 5.61 8.2 5.81 8.40 6.15 9.33 6.58 9.41 6.50 8.18 6.03 10.50 8.50 9.16 7.33 10.73 9.63 8.34 7.64 11.33 9.96 10.81 9.84 8.54 7.49 80 -- High 9.95 9.04 907 8.96 10.23 9.98 Low 8.0 7.54 744 7.16 8.43 8.56 9.19 8.07 11.50 10.50 9.77 7.0 10.47 9.29 7.95 7.19 11.73 992 11.22 9.68 9.41 853 Nov 88 Dec 88 8.35 8.76 7.76 8.07 7.87 8.32 8.78 9.25 7.64 8.00 10.05 10.50 8.72 9.11 1012 10.08 7.80 7.88 10.56 10.98 1027 10.61 8.15 8.39 Jan 89 Feb 89 Mar 89 9.12 9.36 9.85 9.84 8.27 8.53 8.82 8-65 8.43 815 7.88 7.90 7.75 7.64 8.37 8.56 8.82 8.64 8.31 7.84 7.36 7.61 7.65 7.45 9.20 9.51 10.00 9.94 9.59 9.20 8.76 8.64 8.78 8.60 8.33 8.79 8.89 9.14 9.13 896 8.72 832 8.25 8.21 10.50 10.93 11.50 11.50 11.50 11.07 10.98 10.50 10.50 10.50 9.20 9.32 9.61 940 8.98 8.37 7.83 8.13 8.25 8.02 10.09 10.25 10.37 10.33 1009 965 9.54 9.55 9.55 9.39 7.63 7.72 7.85 7.73 7.51 7.35 728 7.36 7.52 7.48 1097 11.03 11.47 11.32 10.90 10.39 10.11 10.38 10.44 10.19 10.73 10.65 11.03 1105 10.77 10.20 9.88 999 10.13 9.95 8.55 8.65 9.09 9.40 9.30 9.03 8.65 8.71 8.62 7.76 7.86 7.97 7.94 7.93 7.16 7.46 7.88 7.78 7.75 8.43 8.50 8.68 8.77 8.76 8.47 8.32 8.32 10.79 10.50 10.50 9.54 9.56 8,31 10.50 8.29 10.50 7.80 7.92 8.15 8.30 8.35 9.58 9.58 7.19 7.31 7.39 7.47 7.46 10.23 10.36 1047 10.47 10.48 9.68 9.96 1009 10.21 10.22 8.60 8.62 8.69 8.69 8.74 8.33 8.19 8.11 8.35 9.55 9.49 9.56 9.00 7.43 7.45 7.58 7.59 10.43 10.17 03 1030 05 1042 1003 10.57 10.16 8.71 8.68 8.70 8.70 940 9.33 9.37 9.39 7.50 7.46 7.47 7.47 10.21 10.24 10.16 10.13 10.11 9.95 9.92 9.82 8.72 8.60 8.58 8.58 9.29 9.27 7.47 7.47 10.15 9.82 8.55 Ap 89 May Jun Jul Aug 89 89 89 89 Sep 89 Oc 89 Weekly 9.81 9.53 9.24 8.99 9.02 8.84 Aug 2 89 Aug 9 89 Aug 16 89 Aug 23 89 Aug 30 89 8.95 Sep 6 89 Sep 13 89 Sep 20 89 Sep 27 80 8.96 8.96 9.05 9.02 7.88 7.70 7.64 7.80 769 7.59 7.53 7.72 8.80 8.75 8.70 8.83 8.23 8.26 10.50 10.50 8.25 10.50 8.25 10.50 Oct 4 89 Oct 11 89 Oct 18 89 Oct 25 88 9.18 8.93 8.76 8.72 7.85 7.67 7.54 7.55 7.83 7.58 7.35 7.30 8.93 8.74 8.48 8.50 8.27 10.50 8.25 8.20 10.50 10.50 8.13 10.50 8.42 8.14 7.92 7.89 1 8 8 89 8.80 8.89 7.73 7.78 7.32 7.37 8.50 8.54 8.11 8.07 10.50 10.50 7.90 7.94 Nov 3 89 Nov 9 89 Nov 10 89 8.74 8.40 7.84 7.70 7.46 7.30 8.58 8.39 10.50 10.50 802 7.87 Nov Nov Diy 8.98 9.04 9.01 8.96 7.68 7.58 8.64 8.43 9.55 7.96 7.90 8.74 7.92 7.91 noghe s Mony FundI RpoM Coums 12 13 and 14m I-dlayquoMs lo Fkay Thursday or Fr ay esIspeaely loaow~gav end t rom ike incoan 7 aie k avmrs Oa my dau fo coamns 1 hrough 11 ae tama*u vW rae on nwccwen te average 1Is nconrac conrnilest Columnm plslonmsAecchg e. on 30-day mIndiloy dly Connkm 14 laFNMA puilasaVpyl Bore Buyr ts&eimle tin cl ri Mtalenilwk Cokini 13 is niMo i-emort ngag(SAhM fr halrIlO one an onHwhio 1 -ye Wasl im i I Cann 10 IB rage il an Vluoa r-n ad 1*emorgag e(FIM) nl l pmop aMing boil FRMi and ARM. wfh h se nurmDber o discona poa p -pewlinirV y NOTE Strictly Conlidential (f-H)- Money and Credit Aggregate Measures Class II FOMC Seasonally adjusstd Period M Money sock measures and liquid assls Bank credil nontransaclions total loans M2 3components in M2 1 ANN. GROWTH RATES () ANNUALLY 1Q4 TO Q4) 1986 1987 1988 QUARTERLY AVERAGE 1988-4th QTR. 1989-1st QTR. 1989-2nd QTR. 1989-3rd QTR. MONTHLY 1988-OCT. NOV. DEC. NOV. in M3 only M3 governmen' olher' 8 9 10 13.2 9.9 9.2 8.8 8.4 7.6 7.5 2 3 4 5 15.6 6.4 4.3 9.3 4.2 5.2 7.3 3.5 5.5 8.2 11.8 10.2 9.1 5.7 6.3 8.3 5.5 7.1 9.7 7.9 7.6 14.6 8.0 12.7 10.2 9.6 2.3 -0.4 -5.6 1.7 3.6 1.8 1.2 7.3 4.1 2.6 3.5 9.2 9.3 10.6 9.1 -4.3 4.8 3.7 2.9 4.7 5.5 5.0 4.7 6.1 6.2 6.2 7.7 7.6 7.7 6.9 5.4 9.2 8.6 7.8 8.1 2.6 1.8 5.6 2.9 6.7 4.0 2.9 8.5 3.4 13.9 4.5 10.3 5.3 6.3 5.3 5.5 6.8 9.5 9.9 4.9 5.1 3.5 7.8 8.8 0.1 1.3 5.4 2.9 0.6 9.8 11.8 9.4 8.1 7 12.1 8.0 17.2 7.7 3.9 0.3 -15.4 -23.2 -9 1.5 2.8 6.5 2.4 -1.2 5.7 9.0 2.2 0.9 4 1.1 3.4 9.0 6.5 -1.0 3.3 8.9 5.1 2.8 14.4 6.4 2.9 7.5 5.0 10.0 7.7 6.2 15 -1.4 1.4 3.5 0.9 -3.3 6.2 11.5 7.2 7.5 8 LEVELS I$BILLIONS) : MONTHLY 1989-MAY JUNE JULY AUG. SEP. 773.3 770.3 777.2 777,7 781.4 3072.2 3088.0 3117.6 3136.4 3156.0 2298.9 2317.7 2340.4 2358.7 2374.6 882.6 885.5 885.7 874.3 857.4 3954.8 3973.5 4003.3 4010.6 4013.5 774.4 782.6 780.3 782.3 3141.6 3154.5 3157.8 3159.4 2367.2 2371.9 2377.5 2377.1 867.8 866.1 861.9 849.3 4009.4 4020.6 4019.6 4008.6 789.0 786.8 788.8 788.8 786.6 3165.5 3171.4 3178.8 3178.0 3181.1 2376.6 2384.6 2389.9 2389.2 2394.5 842.5 845.7 852.3 855.9 852.1 4008.1 4017.1 4031.1 4033.9 4033.2 2 9 16 23 p 30 p Domestic nonlinancial debt' U.S. totl 6 7 : -6.1 1.7 -1.7 -4.9 -15.0 -4.7 10.7 0.8 5.7 10 OCT. and 1989 investments 11 1989-JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEP. OCT. pe MEEKLY 1989-SEP. L 13, 6.3 4746.1 4759.1 4794.4 4814.8 2486.3 2496.8 2518.1 2534.4 2544.1 Debt data are on a monthly average basis, derived by averaging end-of-month levels of adjacent months, discontinuities. p-preliminary pe-preliminary estimate 9.0 4.7 9.0 11.7 5.6 4.3 4.3 0.1 11.0 12.8 2176.5 2184.3 2184.5 2204.6 2228.1 9.2 10.7 8.3 8.2 10.0 8.4 8.3 9.0 6.9 7.7 8.3 7.2 8.4 9.0 7.0 7.5 9.0 8.0 7.2 7.3 6.5 6.5 9.5 8.4 7204.3 7247.3 7297.8 7352.5 7395.6 9380.8 9431.6 9482.3 9557.1 9623.7 and have been adjusted to remove Strictly Conlidential (FR) Components of Money Stock and Related Measures clas seasonally adjusted unless otherwise noted NOV. Small Period Currency Overnight checkable RPs and MMDAs Savings nation deposits deposits Eurodollars NSA deposits time general purpose deposils' denomi- NSA' ________ _______ __ 5 mutual lunds NSA Term Term Instilulions nation time RPs NSA' Eurodollars NSA' and broker/ only deposits* _____dealer' 7 8 9 10 207.6 219.7 236.0 84.7 87.2 86.5 440.8 481.6 534.7 110.0 16 126.0 89.8 99.6 108.7 280.5 263.0 268.4 229.8 257.0 323.9 37.5 44.6 40.8 526.7 122.8 102.8 107.9 268.8 308.8 41.7 84.6 87.4 87.6 532.0 534.4 537.8 125.4 128.4 124.1 100.2 101.6 105.8 108.4 108.7 109.1 269.3 264.5 271.3 312.3 323.7 335.8 41.3 40.5 40.6 241.7 247.2 255.5 89.3 89.6 87.6 544.4 551.6 558.8 125.3 128.5 131.0 100.7 100.0 105.5 109.7 110.6 111.5 270.9 265.2 271.7 334.9 344.2 349.2 40.6 39.9 41.2 402.0 1083.1 1105.8 1118.6 259.3 259.0 265.1 87.7 91.6 95.1 567.7 572.1 573.0 128.8 129.3 129.3 101.3 100.5 99.3 112.3 112.9 113.8 278.1 285.0 279.3 359.5 352.3 351.4 41.4 41.1 41.1 401.5 402.3 404.3 1126.4 1131.8 1132.2 274.6 285.5 294.8 98.2 100.6 99.1 573.1 569.2 563.3 125.1 119.7 116.5 99.7 97.6 92.9 114.6 115.2 283.2 290.8 351.3 355.3 42.0 42.8 569.1 529.9 505.6 361.8 430.8 859.5 900.8 1017.6 208.6 288.8 279.0 77.3 511.4 430.5 998.7 231.0 83.7 OCT. NOV. DEC. 209.7 210.5 211.8 288.9 287.7 288.6 279.4 281.0 282.3 76.0 75.7 78.4 507.5 506.7 502.7 429.2 431.8 431.3 1009.7 1017.8 1025.2 231.3 237.4 239.4 1989-JAN. FEB. MAR. 213.4 214.3 215.6 284.0 284.8 284.3 281.3 280.9 279.1 81.8 79.0 77.5 495.2 485.3 480.3 427.8 1035.7 1048.3 1061.0 APR. MAY JUNE 215.9 216.4 217.4 281.4 278.2 275.0 278.5 271.4 270.7 74.5 73.5 76.0 471.3 457.0 456.9 412.8 273.3 274.5 277.5 77.5 74.8 72.1 459.8 465.4 469.1 278.9 277.6 277.4 15 81.0 92.2 102.5 77.9 81.3 76.7 218.0 218.4 219.3 accep lances securities 14 229.1 260.8 280.9 JULY AUG. SEP. Banker Commercial paper' 13 294.5 292.0 288.4 MONTHLY 1988-SEP. term Treasury 12 179.4 194.9 210.7 4 ShortSavings bonds ___ 2 3 13, 1989 Large denomi- 1 LEVELS I(BILLIONSI : ANNUALLY 14TH QTR.) 1986 1987 1988 1. 2. 3. 4. Money markel Other Demand IIFOMC 6 416.7 424.6 420.8 404.7 11 82.6 Net of money market mutual fund holdings of these items. Includes retail repurchase agreements. All IRA and Keogh accounts at commercial banks and thrift institutions are subtracted from small time deposits. Excludes IRA and Keogh accounts.. Net of large denomination time deposits held by money market mutual funds and thrift institutions. p-preliminary NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES 1 Millions of dollars, not seasonally adjusted November 13, 1989 STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC Treasury coupons Treasury bills 3 Period Net 2 purchases 1984 1985 1986 1987 1988 Redmptions (-) Net chane Net puchases Pro w hin 1-ear 5-10 over 10 826 1,349 190 3,358 2,177 1,938 2,185 893 9,779 4,686 236 358 236 2,441 1,404 441 293 158 1,858 1,398 1,092 -800 3,661 1,084 7,700 3,500 1,000 9,029 2,200 3,779 14,596 19,099 3,905 5,435 1988--Q1 Q2 03 04 319 423 1,795 5,098 2,200 -1,881 423 1,795 5,098 1989--Q1 02 03 -3,842 2,496 -6,450 2,200 2,400 3,200 -6,042 96 -9,650 -3,688 1,600 -5,288 -225 3,077 -10 -571 -5,516 -934 1,200 1,200 2,400 800 3,077 -1,210 -1,771 -7,916 -1,734 1,436 -75 -13 -150 -1,414 1,400 -2,814 -24 -150 -230 -403 400 400 -550 -630 -403 1989--February March April May June July August September October August Sept. 6 13 20 27 Oct. 4 11 18 25 -151 -218 -640 -625 600 400 400 -151 -818 -1,040 -1,025 1 8 219 3,258 3,530 219 -272 Nov. MeNo: 9 16 23 30 LEVEL (bil.$)6 November 8 -99.2 172 - N Federal Net change agencies 1-5 11,479 18,096 20,099 12,933 7,635 Federal Redemptions (-) Net change redemptlons (-) outrlght holdings total 3,440 4,185 1,476 17,366 15,099 6,964 18,619 20,178 20,994 14,513 1,450 3,001 10,033 -11,033 1,557 -175 1,017 -975 6,737 1,824 562 3,903 -3,011 7,030 1,717 8,776 -3,514 5,220 1,393 -1,541 -228 1,361 -163 -20 287 -9 -248 2,104 -172 -6,477 2,075 -9,921 -5,591 924 -893 -225 -5,553 286 2,179 -75 -9 -22 -150 -5,131 -1,285 -1,771 -7,983 -1,884 54 -3,368 2,079 -856 14,448 -23,527 10,002 -5,152 617 3,641 463 -524 -550 -780 -403 -150 -500 -24 30.9 1. Change from end-of-period to end-of-period. 2. Outright transactions in market and with foreign accounts. 3. Outright transactions in market and with foreign accounts, and short-term notes acquired in exchange for maturing bills. Excludes maturity shifts and rollovers of maturing coupon issues. Net RPs 51.5 13.2 26.5 1,914 -432 40 -2,875 -54 2,793 56 9,045 -6,609 -651 -818 -1,064 -1,055 -689 -4,431 4,990 -6,066 219 -272 5,662 -885 227.8 122.1 4. Reflects net change and redemptions (-) of Treasury and agency securities. 5. Includes change in RPs (+), matched sale-purchase transactions (-), and matched purchase sale transactions (+). 6. The levels of agency issues were as follows: . d d within 1-year 11-5 5-10 3.2 1.0 2.1 over 10 0.2 total 6.5 

Federal Reserve (1989, November 13). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19891114

@misc{wtfs_bluebook_19891114,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1989},
  month = {Nov},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19891114},
  note = {Retrieved via When the Fed Speaks corpus}
}