Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optimal character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. STRICTLY CONFIDENTIAL (FR) CLASS II FOMC MONETARY POLICY ALTERNATIVES PREPARED FOR THE FEDERAL OPEN MARKET COMMITTEE BY THE STAFF OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Strictly Confidential (F.R.) Class II -- FOMC August 18, 2000 MONETARY POLICY ALTERNATIVES Recent Developments (1) The FOMC's decision at its June meeting to leave the target federal funds rate unchanged and to retain a statement judging the balance of risks as weighted toward inflation came as little surprise to market participants.1 However, investors interpreted the announcement of the FOMC's decision and the Chairman's monetary policy testimony as emphasizing signs of a moderation in the growth of economic activity. Against that backdrop, economic data releases over the intermeeting period were viewed on net as confirming that demand growth was slowing to a sustainable pace and price pressures would remain damped, and investors marked down their expected level of the funds rate next year by about 25 basis points (chart 1). Futures markets have priced in virtually no chance of a tightening at the August meeting and little change in the federal funds rate over the next year. (2) The downward revision over the intermeeting period in investors' expectations for the path of the target funds rate contributed to a modest easing in domestic financial 1 The federal funds rate averaged close to 6-1/2 percent over the intermeeting period. On July 5, the Desk announced new guidelines for its management of the System portfolio. The new procedures cap SOMA participation at each Treasury auction at a maximum percentage of the total amount issued, with the percentages declining as the maturity of securities being auctioned increases. The same schedule of percentage caps was established to guide SOMA secondary market purchases of securities. As a result of the auction caps, the Desk redeemed $10.4 billion of bills and $367 million of coupons over the intermeeting period. The Desk's outright purchases included $1.9 billion of bills, of which $93 million were bought directly from foreign accounts, and $9.8 billion of coupons, with the coupon purchases tilted toward shorter maturities, consistent with the new guidelines. Chart 1 Financial Market Indicators Selected Treasury Yields Expected Federal Funds Rates Estimated from Percent Financial Futures* Percent 7 I 6/27/2000 8/18/2000 I I I Aug Oct I I I I I I I I I I Dec Feb Apr Jun Aug I I Oct Dec Feb I I Jun 2000 2001 *Estimates from federal funds and eurodollar futures rates with an allowance for term premia and other adjustments. Selected Private Long-Term Yields Dec Feb Apr Jun 2000 Basis Points Percent ily High Yield -__ / Aug Selected Risk Spreads* Percent Da Aug Oct 1999 - Daily Corporate BBB (right scale) -4 [ FOMC '^^ . •A Yield ~High ^A^" BBB ^. .- Aug Oct 1999 Dec Feb Apr Jun 2000 Aug Feb Apr Jun 2000 i Aug Feb Apr Jun 2000 Exchange Rates Index(6/1/99 = 100) 10 raily FOMC Dec Dec Nominal Trade-Weighted Dollar Index(6/1/99) = 100 Aug Oct 1999 Aug Oct 1999 *The spreads compare the yields on the Merrill Lynch 175 and BBB indexes with the ten-year swap rate. Selected Equity Indexes Jun Jun ] ' I Jun - F M Aug Jun Aug Oct 1999 Dec Feb Apr Jun 2000 Aug MFMA:JNS -2- conditions, on net. Nominal Treasury coupon yields dropped 20 to 30 basis points, while the ten-year Treasury inflation-indexed yield shed about 5 basis points. The narrowing spread of nominal over real Treasury yields suggests some decline in inflation compensation, though survey measures of long-term inflation expectations were little changed. Corporate bond yields also fell, but generally not by as much as Treasuries. The resulting slight widening in spreads did not seem to reflect an increased reluctance to bear risk. Investors purchased sizable offerings of new private bonds, including longer-term issues and lower-tier credits, as well as both seasoned and initial public offerings of equities. Still, looking over a somewhat longer period, investors do seem to have become more cautious: Risk spreads for lower-rated firms are at fairly high levels historically and are a good bit wider now than they were earlier this year; similarly, banks have reported tightening their terms and standards on business loans throughout the year. With interest rates down over the most recent intermeeting period, broad stock price indexes rose 1-1/2 to 3 percent. (3) The dollar firmed on balance in foreign exchange markets, even though interest-rate differentials moved against assets denominated in dollars relative to those denominated in the currencies of other industrial countries. Within the major currency index, the dollar appreciated about 2-3/4 percent against the yen and 4 percent against the euro. The Bank of Japan raised its policy rate 25 basis points on August 11 in the face of objections from the rest of the government, ending the zero-interest-rate policy that had prevailed for about eighteen months. This move mostly brought forward tightening that had -3- already been embedded in market prices, and intermediate- and longer-term Japanese yields changed little, on balance, over the intermeeting period. Japanese equity prices rallied after the policy tightening, but still declined about 6 percent over the past eight weeks, perhaps reacting to a rising level of bankruptcies, including that of a prominent retailer. The European Central Bank has kept policy on hold in recent months, but officials have been hinting broadly that more tightening is in store given the vigor in spending along with the uptick in inflation and weakness in the euro. Still, longer-term yields are down 5 to 10 basis points across Europe, and equity prices have posted mixed changes. There was no intervention by U.S. monetary authorities over the intermeeting period. .The exchange value of the dollar depreciated a little on net against the currencies of other important trading partners, paced by a substantial rise in the exchange value of the Mexican peso. Prospects brightened in Mexico on the promise of a peaceful transition of power following the opposition party's victory in the presidential election along with strength in economic data and higher oil prices. Emerging market bond spreads narrowed further, with the Mexican spread shedding 75 basis points. (4) The moderation in the growth of private spending in the second quarter and the tightening in financial conditions through May did not seem to affect the pace of borrowing materially this spring. Growth of domestic nonfinancial sector debt in the second quarter is estimated at a 5-1/4 percent rate, only a touch below that in the first quarter. The Chart 2 Money and Credit Aggregates Annual Growth Rate Ratio Scale Percentage Points Ratio Scale 2.1 - 2.0 M2 Velocity (left scale) 1.9 M2 Opportunity Cost* 1.8 - 1.7 - (right scale) . . IR I 1999 2000 Q1 A M J J A 1987 1989 I I 1991 I I 1993 I I 1995 I I 1997 I 1999 2001 * Two-quarter moving average. p - Projected based on partial data. Debt of Domestic Nonfinancial Sectors Annual Total Growth Rate 1999 2000 01 A M J Annual Growth Rate Nonfederal 2000 01 A M J MARA:DS slight slowdown was entirely accounted for by a faster paydown of federal debt; private borrowing remained quite brisk. In the household sector, growth of mortgage debt and consumer credit was robust. Borrowing by nonfinancial corporations was boosted by continued strong investment spending and an upturn in cash-financed mergers and acquisitions. Partial data for July and early August from banks and securities markets suggest the pace of household and business borrowing may have moderated somewhat more recently, in part reflecting a reduced amount of equity retirements. (5) The growth of M2 has slowed on average in recent months. M2 expanded at a 3-1/4 percent rate in June and July; partial data for August suggest some pickup in growth this month, but only to about a 5 percent pace. The stepdown in monetary expansion most likely reflects the widening opportunity costs of holding assets in M2 stemming from recent policy tightenings and perhaps also the slowdown in consumption growth. On average over the past three months, M2 has been running about in line with the pace that would be expected from our standard monthly M2 demand model, given actual interest rates and Greenbook estimates and projections of income. M3 accelerated in July, advancing at a 9 percent clip, and partial data suggest growth at about that rate in August. In large part, the spurt in M3 growth has been propelled by inflows to institutional money funds. MONEY AND CREDIT AGGREGATES (Seasonally adjusted annual percentage rates of growth) Dec. 1999 to May June July July1 M2 -0.8 3.2 3.3 5.0 M3 3.6 6.7 9.1 7.7 3.8 -18.6 9.5 5.1 -9.0 8.6 n.a. n.a. n.a. 5.4 -7.6 8.9 16.0 13.8 6.6 9.0 8.4 8.4 10.2 10.5 2.7 3.2 2.8 3.2 3.3 3.8 -4.1 -3.2 Money and Credit Aggregates Domestic nonfinancial debt Federal Nonfederal Bank credit Adjusted 2 Memo: Monetary base 3 Adjusted for sweeps 1. For nonfinancial debt and its components, December 1999 to June. 2. Adjusted to remove the effects of mark-to-market accounting rules (FIN S39 and FASB 115). 3. Adjusted for discontinuities associated with changes in reserve requirements. -6- Short-Run Policy Alternatives (6) The staffs forecasts of the growth rates of structural labor productivity and potential GDP through 2001 have been raised noticeably. As a consequence, though the projected expansion of actual GDP also has been boosted, the unemployment rate edges up to a slightly higher level than in the last forecast. The higher unemployment rate and the damping effects of faster productivity growth on unit labor costs trim the pickup in core inflation relative to the previous forecast. Still, as in the last Greenbook, conditions are such that inflation is poised to continue to rise beyond the forecast horizon, and the staff has retained its assumption that the federal funds rate will be increased 3/4 percentage point by the end of 2001. However, the staff now assumes that these policy actions will be deferred until next year, when inflation prospects become more evident. As policy begins to firm and market participants come to realize that the build-up of inflationary pressures will require considerable additional tightening, private bond and mortgage rates are anticipated to rise by an amount roughly comparable to the assumed rise in the funds rate, and equity prices are expected to stay around current levels. In contrast to the June Greenbook, the staff projection for real GDP growth for 2001 is somewhat above the central tendency of Committee members' projections reported to the Congress last month. Nonetheless, with the staff now also forecasting faster growth of potential output, its projections of the unemployment rate and total PCE inflation for next year remain consistent with the Committee members' central tendencies. (7) Recent data on spending, productivity, and labor costs could well be seen by the Committee as on balance supporting a decision to leave the federal funds rate target unchanged at 6-1/2 percent, as in alternative B. Signs of an appreciable moderation in aggregate demand growth no longer seem to be just "tentative and preliminary," and unit labor costs point toward little near-term pressure on inflation. Indeed, the growth of aggregate demand may have already slowed enough to keep the unemployment rate from falling, even before the effects on the economy of previous policy firmings and the flattening in equity prices have fully played out. The conviction that aggregate demand is now growing in line with the expansion of potential output would be strengthened if the Committee found plausible the staff's upward revision to the rate of increase in productivity. However, even if the current level of resource utilization holds for a time, whether that level will ultimately prove sustainable remains an open question. In the meantime, with costs contained and long-term inflation expectations stable or even drifting a bit lower, the Committee might expect to incur little economic cost by awaiting more information to help answer that question. (8) Although the odds that pressures on resources will not intensify may seem better balanced now than they did eight weeks ago, the Committee may still see the risks as tilted toward an unacceptable inflation outcome, given the persisting strength in elements of aggregate demand, the low unemployment rate, and the somewhat elevated current rate of core inflation. The choice of alternative B, accompanied by a sentence conveying a balance -8- of risks weighted in an inflationary direction, would accord with the expectations of market participants. No significant immediate response would be forthcoming in financial markets. Under the staff forecast, economic data over the intermeeting period are likely to continue to indicate moderate demand growth and contained inflation and thus should have little net effect on market prices. (9) The 25 basis point increase in the targeted funds rate of alternative C would seem appropriate if the inflation forecasted by the staff were seen as likely and unacceptable. It might be viewed as unacceptable in part because the already prevailing core CPI inflation rate of 2-1/2 percent in the Greenbook may be judged to be inconsistent with the Federal Reserve's longer-run objective of effective price stability. Even if the Committee were willing to tolerate such a rate of price increase for a while, inflation is headed higher in the staff forecast in that the economy already has overshot the levels of output and employment that are sustainable in the longer run. In such circumstances, delaying needed policy firming could allow inflationary pressures to build, eventually requiring a more disruptive policy tightening and economic slowdown to achieve the same long-run inflation outcome. Aside from the current level of resource utilization, the Committee may see significant upside risks to inflation. Oil prices have remained stubbornly high, and the decline projected by the staff may not materialize, eliminating a source of prospective price restraint and perhaps inducing a ratcheting-up of inflation expectations. In addition, the restraint on aggregate demand put in place by the Committee's prior tightenings has been offset to some extent by the recent -9- rally in capital markets, and prospective increases in productivity growth may boost wealth and expected earnings even more than they have already, especially if real interest rates lie below the higher marginal product of capital. (10) The choice of alternative C would surprise market participants, raising questions about the path for monetary policy going forward. Market participants might wonder whether the Committee has read incoming data as more worrisome than they themselves have or whether the Committee was intent on attaining a lower inflation objective than investors previously perceived. The resulting upward adjustment to participants' impression of the degree of future monetary policy restraint that is likely to be implemented would be especially pronounced if the Committee retained a balance-of-risks sentence emphasizing inflationary concerns. Bond rates, particularly in real terms, could be expected to rise along with short-term yields, the dollar would probably appreciate further, and stock prices would adjust downward. Conversely, a switch to a sentence conveying a balanced set of risks would foster a much greater sense of certainty in markets that the peak in short-term rates had been reached. In this case, the immediate price response in financial markets would be tempered, apart from an upward adjustment of short-term rates of around 1/4 percentage point. (11) With no change in the funds rate over the rest of the year in the staff forecast, the growth of the debt of domestic nonfinancial sectors is projected to slow to a 4-1/2 percent annual rate over the June-to-December period after its 5-1/2 percent pace over the -10- first six months of the year. The deceleration owes to a slowdown of nonfederal debt growth to a 7-1/2 percent rate from 9 percent from December to June. Both a moderation in the growth of nominal spending on consumer durables and fixed investment in the second half of the year and a slowing in equity retirements lead to some abatement of private-sector borrowing. The paydown of federal debt is foreseen as continuing at a similar pace over the last six months of the year, as the federal budget remains in surplus. In the staff forecast, M2 is expected to grow at a 4-3/4 percent annual rate over the five-month period from July to December, a step-up from the pace of the last three months as the effects of previous increases in market interest rates wane. -11- Directive and Balance of Risks Language (12) Presented below for the members' consideration is draft wording for (1) the directive and (2) the "balance of risks" sentence to be included in the press release issued after the meeting (not part of the directive). (1) Directive Wording The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its longrun objectives, the Committee in the immediate future seeks conditions in reserve markets consistent with maintaining/INCREASING/DECREASING the federal funds rate at/TO an average of around ____[DEL: 6-1/2] percent. (2) "Balance of Risks" Sentence Against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the Committee believes that the risks are [balanced with respect to prospects for both goals] [weighted mainly toward conditions that may generate heightened inflation pressures] [weighted mainly toward conditions that may generate economic weakness] in the foreseeable future. Alternative Growth Rates for Key Monetary and Credit Aggregates Alt. B M2 M3 M2 Alt. C Alt. B Alt. C M3 Greenbook Forecast* Monthly Growth Rates Jun-2000 Jul-2000 Aug-2000 Sep-2000 Oct-2000 Nov-2000 Dec-2000 3.2 3.3 5.0 4.5 4.5 4.8 5.0 3.2 *3.3 5.0 4.1 3.7 4.0 4.3 Quarterly Averages 1999 Q4 2000 Q1 2000 Q2 2000 Q3 2000 Q4 5.1 6.0 6.1 3.4 4.7 5.1 6.0 6.1 3.3 4.1 Growth Rate From To 1999 Q4 Jul-2000 5.2 Dec-1999 Jul-2000 Jul-2000 Dec-2000 5.0 4.8 5.0 4.8 7.7 6.6 1998 Q4 1999 Q4 6.1 5.1 6.1 5.1 7.5 8.3 1999 Q4 2000 Q4 10.1 10.5 7.8 7.5 6.4 Debt 6.7 9.1 8.4 6.1 5.6 5.6 5.7 3.2 3.3 5.0 4.5 4.5 4.8 5.0 6.7 9.1 8.4 6.3 6.0 6.0 6.0 10.1 10.5 7.8 7.5 6.1 5.1 6.0 6.1 3.4 4.7 10.1 10.5 7.8 7.5 6.4 8.9 *This forecast is consistent with nominal GDP and interest rates in the Greenbook forecast. SELECTED INTEREST RATES (percent) August 21, 2000 Long-term Short-term bills Treasurymarket secondary Federal Federal 1 CDs secondary market Comm. paper Indexed yields U.S. government constant maturity yields Moody's Municipal Bond Conventional home mortgages primary market ARM 3-month 6-month 1-year 3-month 1-month 2-year 5-year 10-year 30-year 5-year 10-year 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 BuyerFixed-rate 99 -- High -- Low 5.59 4.42 5.54 4.32 5.82 4.46 5.96 4.49 6.16 4.86 6.33 4.76 6.23 4.59 6.33 4.56 6.41 4.67 6.46 5.12 4.03 3.61 4.33 3.76 8.44 7.24 6.23 5.17 8.15 6.74 6.64 5.56 00 -- High -- Low Monthly Aug 99 Sep 99 Oct 99 Nov 99 Dec 99 6.75 5.05 6.27 5.41 6.46 5.67 6.33 6.03 6.80 5.93 6.58 5.54 6.89 6.19 6.76 6.04 6.77 5.80 6.73 5.71 4.09 3.63 4.39 3.96 9.02 8.22 6.35 5.76 8.64 7.96 7.32 6.56 5.07 5.22 5.20 5.42 5.30 4.86 4.81 5.00 5.22 5.35 5.08 5.09 5.19 5.43 5.68 5.18 5.24 5.41 5.54 5.83 5.41 5.50 6.13 6.00 6.05 5.18 5.28 5.28 5.37 5.97 5.68 5.66 5.86 5.86 6.10 5.84 5.80 6.03 5.97 6.19 5.94 5.92 6.11 6.03 6.28 6.07 6.07 6.26 6.15 6.35 4.03 4.05 4.12 4.10 4.25 8.15 8.20 8.38 8.15 8.19 5.81 5.92 6.12 6.10 6.18 7.94 7.82 7.85 7.74 7.91 6.18 6.20 6.27 6.36 6.53 Jan Feb Mar Apr May Jun Jul Weekly Jun Jun Jun Jul Jul Jul Jul Aug Aug Aug Daily Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug 5.45 5.73 5.85 6.02 6.27 6.53 6.54 5.47 5.72 5.86 5.82 5.96 5.85 6.13 5.75 5.99 6.11 6.07 6.38 6.23 6.27 6.10 6.21 6.21 6.12 6.25 6.17 6.07 5.95 6.01 6.14 6.28 6.71 6.73 6.67 5.59 5.76 5.93 6.02 6.40 6.53 6.49 6.44 6.61 6.53 6.40 6.81 6.48 6.34 6.58 6.68 6.50 6.26 6.69 6.30 6.18 6.66 6.52 6.26 5.99 6.44 6.10 6.05 6.63 6.23 6.05 5.85 6.15 5.93 5.85 4.36 4.28 4.15 3.98 4.14 4.08 4.02 8.33 8.29 8.37 8.40 8.90 8.48 8.35 6.31 6.29 6.15 6.01 6.23 6.05 5.89 8.21 8.33 8.24 8.15 8.52 8.29 8.15 6.61 6.72 6.72 6.80 7.07 7.24 7.28 6.01 5.99 5.98 5.95 5.87 5.89 5.85 5.85 5.82 5.76 8.22 8.14 8.22 8.16 8.09 8.21 8.13 8.12 8.04 7.96 7.21 7.22 7.26 7.27 7.22 7.32 7.29 7.28 7.28 7.21 T 00 00 00 00 00 00 00 16 23 30 7 14 21 28 4 11 18 00 00 00 00 00 00 00 00 00 00 6.52 6.49 6.62 6.75 6.45 6.51 6.49 6.48 6.47 6.52 5.84 5.82 5.83 5.99 6.14 6.16 6.19 6.23 6.26 6.27 6.23 6.19 6.22 6.20 6.26 6.30 6.29 6.35 6.32 6.35 6.14 6.15 6.12 6.06 6.08 6.09 6.04 6.08 6.16 6.20 6.72 6.71 6.73 6.69 6.66 6.67 6.66 6.66 6.61 6.61 6.52 6.54 6.58 6.52 6.49 6.49 6.47 6.49 6.47 6.47 6.45 6.48 6.44 6.31 6.34 6.40 6.31 6.23 6.19 6.28 6.27 6.29 6.25 6.13 6.18 6.24 6.16 6.09 6.04 6.11 6.06 6.09 6.08 6.01 6.06 6.10 6.04 5.98 5.85 5.80 5.91 5.95 5.94 5.88 5.87 5.87 5.80 5.75 5.72 5.71 4.07 4.07 4.08 4.02 4.03 4.02 4.00 3.98 3.98 4.01 8.42 8.45 8.48 8.40 8.36 8.35 8.29 8.27 8.24 2 3 4 7 8 9 10 11 14 15 16 17 18 00 00 00 00 00 00 00 00 00 00 00 00 00 6.42 6.45 6.44 6.46 6.44 6.48 6.52 6.50 6.58 6.63 6.48 6.47 6.45 6.25 6.23 6.23 6.23 6.26 6.25 6.25 6.29 6.27 6.28 6.27 6.27 6.27 6.35 6.34 6.31 6.32 6.32 6.32 6.30 6.34 6.34 6.37 6.35 6.35 6.32 6.11 6.10 6.07 6.11 6.12 6.17 6.17 6.23 6.20 6.21 6.21 6.20 6.17 6.67 6.65 6.64 6.62 6.61 6.61 6.60 6.61 6.61 6.61 6.61 6.61 6.50 6.48 6.48 6.47 6.47 6.49 6.46 6.46 6.46 6.49 6.47 6.47 6.23 6.22 6.15 6.20 6.16 6.18 6.16 6.25 6.25 6.28 6.30 6.30 6.27 6.09 6.07 6.02 6.07 6.03 6.03 6.00 6.07 6.07 6.11 6.13 6.13 6.09 5.98 5.95 5.91 5.97 5.93 5.81 5.76 5.79 5.78 5.81 5.83 5.81 5.78 5.77 5.74 5.72 5.76 5.73 5.73 5.68 5.72 5.70 5.72 5.73 5.72 5.69 3.98 3.98 3.97 3.97 3.99 3.99 3.99 3.98 3.99 4.01 4.01 4.02 4.02 8.28 8.26 8.24 8.26 8.24 8.25 8.23 8.24 8.23 8.24 8.25 8.27 I 6.61 -- NOTE: Weekly data for columns 1through 13 are week-ending averages. Columns 2 through 4 are on a coupon equivalent basis. As of September 1997, data in column 6 are interpolated from data on certain commercial paper trades settled by the Depository Trust Company; prior to that, they reflect an average of offering rates placed by several leading dealers. Column 14 is the Bond Buyer revenue index, which is a 1-day quote for Thursday. Column 15 is the average contract rate on new commitments for fixed-rate mortgages (FRMs) with 80 percent loan-to-value ratios at major institutional lenders. Column 16 is the average initial contract rate on new commitments for 1-year, adjustable-rate mortgages (ARMs) at major institutional lenders offering both FRMs and ARMs with the same number of discount points. p - preliminary data MFMA:JWR Strictly Confidential (FR) Cl ass II FOMC Money and Debt Aggregates August 21, 2000 Seasonally adjusted Money stock measures Domestic nonfinancial debt nontransactionscomponents Period M1 M2 1 2 In M2 In M3 only 3 4 U. S. M3 government' 5 6 other' total' 7 8 Annual growth rates(%): Annually (Q4 to Q4) 1997 1998 1999 -1.2 2.2 1.8 5.7 8.5 6.1 8.4 10.8 7.6 19.9 18.3 11.3 8.9 10.9 7.5 0.8 -1.1 -2.5 7.0 9.5 9.6 5.4 6.9 6.8 Quarterly(average) 1999-Q3 Q4 6.2 6.4 -1.8 4.8 5.3 5.1 7.6 5.3 2000-Q1 4.0 23.7 5.0 10.1 -0.3 -4.3 8.0 9.4 0.5 6.0 7.8 22.4 10.5 -4.4 8.8 Q2 6.0 -1.4 6.1 8.5 11.9 7.8 -7.6 8.7 5.3 -0.7 -0.9 -2.8 5.7 8.9 14.5 5.8 4.7 5.1 4.4 5.3 7.3 7.9 6.4 7.7 4.1 4.1 5.0 1.3 0.3 5.2 24.2 41.0 43.8 4.6 3.5 5.2 9.7 14.9 17.3 1.4 1.0 -4.2 -5.8 -7.6 0.9 7.1 8.6 10.6 9.7 8.1 8.6 5.9 6.9 7.4 6.3 4.8 7.0 -3.7 -14.6 7.1 4.7 -11.8 -2.9 0.9 6.2 3.1 9.5 10.4 -0.8 3.2 3.3 9.3 8.6 10.2 12.1 2.6 5.0 4.0 13.4 3.8 23.5 3.8 14.7 15.3 23.4 8.2 3.3 13.4 8.5 3.6 6.7 9.1 -4.4 -12.1 3.1 -5.5 -18.6 -9.0 9.1 8.9 7.9 8.4 9.5 8.6 6.3 4.6 6.9 5.5 3.8 5.1 1112.3 1116.7 1105.7 1103.0 1103.8 4728.3 4769.2 4766.0 4778.8 4791.9 3615.9 3652.5 3660.4 3675.8 3688.0 1883.9 1889.8 1912.9 1937.3 1975.0 6612.2 6659.0 6679.0 6716.1 6766.9 3618.8 3602.3 3546.5 3520.0 14020.6 14118.3 14230.5 14332.5 3 10 17 24 31p 1124.6 1099.5 1096.7 1103.9 1107.5 4788.7 4786.7 4792.3 4796.3 4795.2 3664.1 3687.2 3695.6 3692.4 3687.7 1954.4 1954.7 1982.9 1982.2 1990.3 6743.1 6741.5 6775.2 6778.5 6785.4 7p 1088.6 4810.5 3721.8 1995.9 6806.4 Monthly 1999-July Aug. Sep. Oct. Nov. Dec. 2000-Jan. Feb. Mar. Apr. May June July p Levels (Sbillions): Monthly 2000-Mar. Apr. May June July p Weekly 2000-July Aug. 1. Debt data are on a monthly average basis, derived by averaging end-of-month levels of adjacent months, and have been adjusted to remove discontinuities. p pe preliminary preliminary estimate 17639.4 17720.6 17777.0 17852.5 Changes in System Holdings of Securities 1 (Millions of dollars, not seasonally adjusted) Strictly Confidential Class IIFOMC August 18, 2000 Treasury Bills Net _Purchases 2 9,147 3,550 Redemptions (-) Treasury Coupons Net Change Net Purchases 3 1-5 5-10 <1 5,549 6,297 20,080 12,901 11,895 19,731 1999 QII 3,978 8,751 QIV 2,341 2,414 1,272 4,528 2000 Q Oil 2,294 2,000 198 7,263 -198 -4,969 1999 Dec Apr May Jun Jul 2,294 1,825 2000 May 24 May 31 Jun 7 Jun 14 Jun 21 Jun 28 Aug 2 Aug 9 Aug 16 2000 Aug 17 Aug 18 Intermeeting Period Jun 27-Aug 18 Memo LEVEL (bll $) Auo 18 5,897 1,996 2,294 4,303 4,884 9,428 2,676 1,429 2,594 447 463 --- 2,393 -6,779 43,928 43,771 2,035 8,347 10,382 17,749 5,094 17,697 -23 -34 -2,103 -2 126 581 3,152 1,075 2,182 1,453 30 474 3,514 581 1,257 &#45;&#45;&#45; 160 809 1,069 &#45;&#45;&#45; 740 489 330 930 164 --- 1,723 890 4,188 4,902 -4,188 -3,077 1,875 1,284 706 2,259 2,297 -2,297 2,109 2,079 -2,109 - 9,535 5,073 9,478 553 1,487 29,921 3,207 7,398 2,978 2,419 -1,886 -445 -8,174 -9,709 -10060 -10,154 6,802 6,802 3,001 26,082 29 083 1,642 -25 -6,055 4,604 -3,635 -490 -12,915 -29,095 3,250 46 -18,970 -24,490 -385 -443 1,361 3,590 -715 -456 599 528 1,151 500 -1,243 3,517 1,385 -1,692 599 1,607 -584 -2,079 500 1,825 93 -1,385 601 93 3,376 -3,376 10,357 -8,439 170 468 R7 R 5,472 131 1 Change from end-of-penod to end-of-penod 2 Outnght purchases less outright sales (in market and with foreign accounts) 3 Outright purchases less outright sales (in market and with foreign accounts) Includes short-term notes acquired in exchange for maturing bills Excludes maturity shifts and rollovers of maturing issues 1,253 1,138 o A 617 4 5 6 7 n c: 10,179 om ~i I vI 4,445 -1,262 3,013 389 -814 139 -5,851 7,884 1,886 2,557 -3,964 10,442 -5,996 -812 -237 1,366 -105 101 -4,629 917 -136 1,089 14 1,104 5,100 -5,545 2,009 22 7,109 -5,523 2,021 -408 -2,759 1,484 867 -647 -1,994 20 -4753 1 504 -980 367 3,184 -3,827 -250 -2,079 738 2,947 2,171 651 2,683 Net Change 2,393 -7,242 1,450 -198 LongTerm 24,902 1,399 1,679 1,515 -2,297 ShortTerm 6 ~ 40,586 1,298 930 198 779 2,297 Net RPs 32,979 23,699 900 3,319 &#45;&#45;&#45; Net Change Net change total outright holdings 4 599 552 Jul 5 Jul 12 Jul 19 Jul 26 3,449 2,039 2000 Jan Feb Mar Redemptions (-) Over 10 Federal Agency Redemptions (-) -1,652 -2017 1,151 -2,034 15 -2,681 -1 637 -3,376 3,973 -4,675 -20 3,953 -4,675 1,739 -4,879 -3,975 -8,854 5260 -169 100 -69 Includes redemptions (-) of Treasury and agency securities RPs outstanding less matched sale-purchases Original matunty of 15 days or less Original matunty of 16 to 90 days MRAKRM 

Federal Reserve (2000, August 21). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_20000822

@misc{wtfs_bluebook_20000822,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {2000},
  month = {Aug},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_20000822},
  note = {Retrieved via When the Fed Speaks corpus}
}