Greenbook/Tealbook

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 some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. 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 optical 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. Content last modified 6/05/2009. January 14, 1977 CONFIDENTIAL (FR) CLASS II - FOMC SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System TABLE OF CONTENTS THE DOMESTIC NONFINANCIAL ECONOMY Retail trade inventories..................................... Page 1 TABLE: Business inventories.......................................... 2 THE DOMESTIC FINANCIAL ECONOMY Mortgage market.............................................. 2 TABLES: Average rates and yields on new-home mortgages................ 3 Interest rates............................................... 4 ERRATUM Part I ....................................................... 5 SUPPLEMENTAL NOTES The Domestic Nonfinancial Economy Book value of retail trade inventories fell at a $3.0 billion annual rate in November, following a $2.3 billion October rate of fall and an average rate of accumulation of $9.9 billion in the third quarter. Nondurable stocks fell at a $5.0 billion annual rate in November compared with a $1.4 billion rate of accumulation in October and an average rate of accumulation of $2.1 billion in the third quarter. Nonautomotive durable stocks rose at a $1.2 billion annual rate in November, somewhat below both the October rate of increase of $2.0 billion and the $3.1 billion third quarter average rate of increase. annual rate in November, Automotive stocks rose at a $0.7 billion following the strike induced $5.6 billion October rate of decumulation, but still much below the $4.8 billion third quarter average annual rate of accumulation. The rate of growth of manufacturing and trade inventories was only $3.7 billion in November, the slowest rate of growth in 1976, much below both the $21.4 billion October rate of rise and the $29.6 billion third quarter average annual rate of increase. The manufacturing and trade inventory-sales ratio fell to 1.52 in November from 1.55 in October. - 2 - BUSINESS INVENTORIES (Change at annual rates in seasonally adjusted book values, $ billions) 1975 IV 1976 I II III Oct. Nov. Manufacturing and trade Manufacturing Durable Nondurable -.4 .6 -4.4 5.0 23.1 7.5 1.7 5.8 31.5 14.2 6.8 7.5 29.6 15.4 6.8 8.6 21.4 20.5 17.7 2.8 3.7 2.9 5.1 -2.2 Trade, total Wholesale Retail -1.0 -2.0 1.0 15.6 5.1 10.5 17.3 9.0 8.3 14.2 4.3 9.9 .9 1.5 -2.3 .8 3.8 -3.0 Auto -. 9 1.1 .1 4.8 -5.6 .7 The Domestic Financial Economy Mortgage market. Average interest rates on new commitments for conventional new- and existing-home mortgages in the primary market declined 5 basis points in December, according to the HUD(FHA) field office opinion survey. In the private secondary market for FHA-insured new-home loans, yields declined by 20 basis points during December to the lowest level in three years. These movements are generally consistent with the primary and secondary mortgage market rates reported in the Greenbook. While the average discount on FHA-insured mortgages traded in the secondary market declined to two points by the end of December, a further cut in the ceiling rate for Government-underwritten mortgages seems unlikely in the near future, in view of the sharp back-up in secondary market yields in early January. - 3 AVERAGE RATES AND YIELDS ON NEW-HOME MORTGAGES (HUD-FHA Field Office Opinion Survey) End of Month Primary market Conventional loans Level 2/ Spread 4/ (per cent) (basis points), Secondary market 1/ FHA-insured loans Level 3/ Spread 4/ Discounts (per cent) (basis points) (points) 1 9 75-Low High 8.90 (Mar.) 9.25 (Sept., Oct.) -70 (Mar.) +15 (Jan.) 8.69 (Mar.) 9.74 (Sept.) -91 (Mar.) +31 (Oct.) 2.4(Dec.) 6.2(Aug.) 1976-Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. 9.05 9.00 8.95 8.90 9.00 9.05 9.05 9.05 9.00 9.00 8.95 8.90 +39 442 +42 +32 + 5 +35 +33 +58 +77 +71 +90 n.a. 9.06 9.04 n.a. 8.82 9.03 9.05 8.99 8.93 8.82 8.55 8.45 8.25 +40 +46 n.a. +24 + 8 +35 +27 +46 +59 +26 +40 n.a. 2.4 2.2 n.a. 2.5 4.1 4.2 3.8 3.3 2.5 4.3 3.6 2.0 1/ Any gaps in data are due to periods of adjustment to changes in maximum permissible contract rates on FHA-insured loans. 2/ Average contract rates (excluding fees or points) on commitments for conventional first mortgage loans, rounded to the nearest 5 basis points. 3/ Average gross yield (before deducting servicing costs) to investors on 30-year minimum-downpayment FHA-insured first mortgages for immediate delivery in the private secondary market (excluding FNMA), assuming prepayment in 15 years. 4/ Average mortgage rate minus average yield on new issues of Aaa utility bonds in the last week of the month. -4 - INTEREST RATES (One day quotes--in per cent) Highs 1976 Lows Dec. 20 Federal funds (wkly. avg.) 5.58(6/30) 4.63(12/22) 4.63(12/22) 4.55(1/12) 3-month Treasury bills (bid) Comm. paper (90-119 days) Bankers' acceptances Euro-dollars CD's (NYC) 90 days ost often quoted new 5.57(6/2) 6.00(6/15) 5.95(6/2) 6.81(6/1) 4.24(12/20) 4.63(12/31) 4.50(12/20) 4.81(12/8) 4.24 4.63 5.00 4.52 4.75 4.78 5.19 5.75(6/16) 4.50(12/29) 4.50(12/15) 4.70(1/12) 6-month Treasury bills (bid) Comm. paper (4-6 mos) Federal agencies CD's (NYC) 180 days Most often quoted new 5.96(5/27) 6.00(6/22) 6.42(5/27) 4.47(12/23) 4.63(12/31) 4.72(12/22) 4.47 4.63 4.72 4.72 4.75 4.84(1/7) 6.50(6/2) 4.60(12/29) 4.60(12/15) 4.88(1/12) 6.39(5/27) 6.86(5/28) 4.59(12/27) 5.00(12/27) 4.59 5.03 4.87 5.20(1/7) 6.75(6/16) 3.70(5/23) 4.30(12/15) 2.50(12/31) 4.80(12/15) 2.60(12/17) 5.13(1/12) 2.80(1/14) 7.82(5/27) 8.20(5/21) 5.99(11/26) 7.17(12/31) 6.08 7.28 6.50 7.46 7.97(12/20) 9.08(12/17) 7.97 9.09 7.96(1/12) 9.07(1/12) 8.95(5/28) 7.93(12/10) 7.95(12/13) 8.05p(1/1 4 ) Municipal Bond Buyer Index 7.13(1/8) 5.83(12/30) 5.93(12/22) 5.89 Mortgage--average yield in FNMA auction 9.20(611) 8.39(12/27) 8.51(12/13) 8.46(1/10) 1977 Jan. 13 Short-Term Rates 1-year Treasury bills (bid) Federal agencies CD's (NYC) Most often quoted new Prime municipals 4.55 Intermediate and Long-Term Treasury (constant maturity) 5-year 20-year Corporate Seasoned Aaa Baa New Issue Aaa Utility 8.66(1/2) 10.34(1/2) -5Erratum: Part-I The following correction should be made in the High Employ- ment Budget surplus data, as estimated by the Federal Reserve, pp. I-8, I-10, on and I-12. Years Quarterly FY1977 CY1976 CY1977 1976 3 1977 4 1 2 3 4 High Employment Budget Surplus(+)/Deficit(-) (NIA Basis) -23.6 -11.9 -26.3 -9.9 -11.1 -7.7 -54.8 -21.0 -21.6 

Federal Reserve (1977, January 17). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19770118_part2

@misc{wtfs_greenbook_19770118_part2,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1977},
  month = {Jan},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19770118_part2},
  note = {Retrieved via When the Fed Speaks corpus}
}