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 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. CONFIDENTIAL (FR) CLASS III - FOMC September 27, 1985 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 FINANCIAL ECONOMY Security Issuance by the Farm Credit Banks . . . . . . . .. Tables Monetary aggregates . . . . . . . . . Commercial bank credit and short- and . . . . . . . term business credit Selected financial market quotations . . . . . . . . . . intermediate.. . . . . . . . . .. . . . . . INTERNATIONAL DEVELOPMENTS . . . . . . . . . . . . . . . . Table U. S. merchandise trade. . . . . . . . . . . . . . . . . . .. SUPPLEMENTAL NOTES THE DOMESTIC FINANCIAL ECONOMY Security Issuance by the Farm Credit Banks Wednesday afternoon the Farm Credit Banks priced $1,366 million of 6month securities at a yield of 8.30 percent, 83 basis points above the coupon-equivalent rate on 6-month Treasury bills. Security dealers were expecting a rate of 8.25 percent (representing a spread of 75 to 80 basis points over Treasury securities), but the Farm Credit System increased the rate slightly to ensure that the sale went smoothly. In secondary market trading on Thursday, the yield spread narrowed to 72 basis points; financial markets in New York were closed on Friday because of Hurricane Gloria. issuance of this security represented a net paydown of $641 million. The A 9-month security also was scheduled to be sold, but this issue was cancelled because the 37 Farm Credit Banks expressed little interest in raising funds with this maturity. MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted) 1983: Q4 to 1984:Q4 1. 2. 3. Ml M2 13 Q1 Q2 1985 June September 27, 1 July Aug. 1985 Growth from Q4 1984 to Aug. 1985 - Percentage change at annual rates 5.2 7.7 10.4 10.6 12.0 10.7 10.2 5.3 5.2 19.8 13.8 10.5 9.3 8.7 4.3 12.6 (16.1)2 9.5 7.9 Levels in billions of dollars Aug. 1985 Selected components 4. Currency 7.2 6.3 6.7 10.3 6.6 12.3 167.1 5. Demand deposits 1.1 7.0 8.6 23.0 0.9 14.3 264.0 6. Other checkable deposits 10.5 21.1 16.1 22.9 24.7 38.9 168.9 7. M2 minus M1 3 8.6 12.5 3.7 11.9 8.5 8.2 1907.8 7.3 64.7 -29.9 -18.8 -1.9 67.1 66.1 17.0 8.1 32.7 13.6 -0.7 9.3 22.3 16.8 2.7 6.7 6.1 2.2 176.7 826.1 5.2 11.1 7.3 29.2 -1.8 7.9 11.8 6.5 6.5 30.1 2.2 7.0 19.6 -7.1 3.6 15.7 -13.3 1.0 441.9 384.1 844.6 -3.6 15.5 17.8 1.7 10.5 4.0 12.6 3.3 20.6 -7.9 22.3 -13.9 350.2 494.4 22.1 5.5 4.8 -1.9 -13.3 -1.5 622.2 26.0 16.0 48.8 9.0 2.6 21.0 6.4 8.3 2.6 -11.2 -19.4 2.3 -12.2 -9.0 -16.9 3.7 8.1 -3.9 421.7 267.5 153.7 33.6 45.6 -8.3 31.2 -19.5 2.4 7.7 16.2 -12.1 68.0 -33.1 -37.1 -41.1 -35.9 -32.2 -35.2 29.6 -11.0 62.9 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money market mutual fund shares, NSA Commercial banks Savings deposits, SA, 4 plus MMDAs, NSA Small time deposits Thrift institutions Savings deposits, SA, 4 plus MMDAs, NSA Small time deposits M3 minus M25 Large time deposits 6 At commercial banks, net At thrift institutions Institution-only money market mutual fund shares, NSA Term RPs, NSA Term Eurodollars, NSA - MEMORANDA: at commercial Managed liabilities 23. banks (24+25) 24. Large time deposits, gross Nondeposit funds 25. 26. Net due to related foreign institutions, NSA 7 27. Other 66.5 75.5 Average monthly change in billions of dollars - 4.7 3.2 1.5 4.1 1.4 2.8 -2.5 -1.0 -1.5 -3.9 -4.4 0.5 -7.6 -3.6 -4.0 6.1 1.8 4.3 437.8 325.0 112.8 0.9 0.5 0.6 2.2 -1.3 -0.2 -4.2 4.7 -4.3 0.2 7.2 -2.8 -31.3 144.1 U.S. government deposits at commercial 28. 8 7.5 -8.2 16.7 banks -8.2 7.5 -5.2 1.9 -1.4 0.2 1. Quarterly growth rates are computed on a quarterly average basis. Dollar amounts shown under memoranda for quarterly changes are calculated on an end-month-of-quarter basis. 2. Figure in parentheses calculated from Q2 1985 base. 3. Nontransactions M2 is seasonally adjusted as a whole. 4. Growth rates are for savings deposits, seasonally adjusted, plus money market deposit accounts (MMDAs), not seaCommercial bank savings deposits excluding M DAs increased during July and August 1985 at rates sonally adjusted. At thrift institutions, savings deposits excluding IMKAs increased of 12.8 percent and 9.7 percent respectively. during July and August 1985 at rates of 18.3 percent and 22.9 percent respectively. 5. The non-M2 component of M3 is seasonally adjusted as a whole. institutions. 6. Net of large-denomination time deposits held by money market mutual funds and thrift 7. Consists of borrowings from other than commercial banks in the form of federal funds purchased, securities sold' for borrowed money (including borrowings from the Federal under agreements to repurchase, and other liabilities Data are partially estimated. Reserve and unaffiliated foreign banks, loan RPs and other minor items). 8. Consists of Treasury demand deposits and note balances at commercial banks. 0.2 -1.4 1.9 -5.2 3 COMMERCIAL BANK CREDIT ANDSRORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data) 1 1984 Q4 Q1 Q2 1985 June -Commercial 1. 2. Aug. Levels in bil. of dollars Aug.P Bank Credit at banks 9.8 10.3 9.1 9.3 10.1 7.0 1824.9 Securities 0.2 5.5 7.3 9.1 15.8 7.5 419.1 3.4 10.3 -0.4 3.2 19.8 -0.4 270.9 -5.6 -3.4 16.7 20.3 8.3 22.3 148.2 12.8 11.7 10.3 9.3 8.5 6.9 1405.8 U.S. goverment securities 4. Other securities Total loans 6. Business loans 7.8 10.6 2.6 3.6 1.2 3.2 485.7 7. Security loans 37.5 16.5 87.8 80.0 9.0 -107.2 36.7 8. Real estate loans 12.1 10.9 12.0 11.0 12.1 11.7 405.3 9. Consumer loans 15.0 10.9 277.4 17.4 16.1 - 10. 1985 Total loans and securities 3. 5. July September 27, Business loans net of bankers acceptances 2 14.7 12.5 Short- and Intermediate-Term Business Credit 0.5 -0.2 7.9 9.5 26.0 -46.9 23.3 63.8 -12.1 8.7 7.2 4.3 2.9 -0.5 3.7 3.5 482.0 -49.0 18.8 11. Loans at foreign branches 12. Sum of lines 10 & 11 13. by Commercial paper issued 3 nonfinancial firms 51.2 -6.0 33.8 14.0 0.0 14. Sums of lines 12 & 13 13.7 5.4 8.0 4.0 -0.2 15. Bankers acceptances: -12.2 -10.2 -27.4 6.9 3.3 -2.0 6.1 8.0 5.1 3.4 n.a. 143.2 (July) 7.0 3.7 -0.8 n.a. 755.9 (July) related4, 16. 5 1.2 500.8 43.0 81.0 6.8 581.8 U.S. trade -6.5 Line 14 plus bankers acceptances: U.S. trade related 17. Finance company loans to business 18. Total short- and intermediateterm business credit (sum of lines 16 & 17) 4 -5.5 12.4 4.6 23.2 21.4 14.4 7.7 -7.0 34.0 615.8 n.a.-not available. p-preliminary 1. Average of Wednesdays for domestically chartered banks and average of current and preceding ends of months for foreign-related institutions. 2. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 3. Average of Wednesdays. 4. Based on average of current and preceding ends of month. 5. Consists of acceptances that finance U.S. imports, U.S. exports and domestic shipment and storage of goods. SELECTED FINANCIAL MARKET QUOTATIONS (Percent) 1982/1983 Cyclical low 1 1985 1984 Highs March highs June lows FOMC Aug. Sept. 26 Change from: FOMC 1984 Aug. highs Short-term rates Federal funds 2 8.46 11.63 8.58 7.38 7.92 7.91 -3.72 -. 01 Treasury bills 3 3-month 6-month 1-year 7.08 7.62 7.73 10.67 10.77 11.13 8.80 9.13 9.25 6.66 6.81 6.98 7.12 7.29 7.43 6.94 6.93 7.33 -3.73 -3.84 -3.80 -. 18 -. 36 -. 10 Commercial paper 1-month 3-month 8.00 7.97 11.42 11.35 8.94 9.12 6.95 7.01 7.70 7.70 7.66 7.65 -3.76 -3.70 -. 04 -. 05 Large negotiable CDs 3 1-month 3-month 6-month 8.08 8.12 8.20 11.52 11.79 12.30 8.89 9.29 9.92 7.09 7.18 7.30 7.78 7.82 7.94 7.75 7.78 7.86 -3.77 -4.01 -4.44 -. 03 -. 04 -. 08 Eurodollar deposits 4 1-month 3-month 8.68 8.71 11.89 12.20 8.89 9.58 7.45 7.50 7.89 7.99 7.96 8.09 -3.93 -4.11 .07 .10 10.50 13.00 10.50 9.50 9.50 9.50 -3.50 10.30 10.58 7.12 7.47 7.30 7.64 7.01 7.36 U.S. Treasury (constant maturity) 3-year 9.33 13.49 10-year 10.12 13.99 30-year 10.27 13.94 11.22 12.02 11.97 8.73 9.83 10.23 9.20 10.20 10.48 9.12 10.22 10.50 Municipal revenue (Bond Buyer index) 9.21 11.44 10.25 9.10 9.475 Corporate--A utility Recently offered 11.64 15.30 13.23 11.50 12.55 14.68 12.31 13.29 11.14 12.05 9.83 Bank prime rate Treasury bill futures Dec. 1985 contract Mar. 1986 contract -. 29 -. 28 Intermediate- and long-term rates -4.37 -3.77 -3.44 -. 08 .02 .02 9.695 -1.75 .22 11.73e 11.90e -3.40 12.246 9.476 12.216 9.516 -2.47 -2.80 Home mortgage rates S&L fixed-rate S&L ARM, 1-yr. n.a. 1983 1984 Highs Lows Highs Stock prices Dow-Jones Industrial 1287.20 1086.57 1359.54 NYSE Composite 99.63 85.13 113.49 AMEX Composite 249.03 187.16 237.49 NASDAQ (OTC) 328.91 225.30 307.77 1. One-day quotes except as noted. 2. Averages for two-week reserve maintenance period closest to date shown. Last observation is the average-to-date for the maintenance period ending September 25, 1985. 3. Secondary market. 1985 FOMC Aug. Sept. 26 -. 03 .04 Percent change from: 1984 FOMC Aug. lows 1323.70 1320.79 21.5 -0.3 108.92 104.82 23.1 -3.8 231.84 221.89 18.5 -4.3 296.36 280.20 24.3 -5.5 4. Averages for statement week closest to date shown. 5. One-day quotes for preceding Thursday. 6. One-day quotes for preceding Friday. e--estimated SUPPLEMENTAL NOTES INTERNATIONAL DEVELOPMENTS In August, the U.S. merchandise trade deficit was slightly smaller than that recorded in July. declined somewhat. Exports were about unchanged and imports For the July-August period on average, the deficit was substantially smaller than in the second quarter, with most of the change coming in imports. commodity categories. The drop in imports occurred in all major The volume of oil imports averaged 4.9 million barrels per day in July-August compared with 5.4 mbd in the second quarter; the average price of imported oil fell about $1.00 per barrel over the same period. Other large declines occurred in industrial supplies and in consumer goods. In today's press release, the Commerce Department included a separate set of data revised for all months of 1984 and 1985. The carry-over of documents received too late for inclusion in the appropriate statistical month has become very large; and it varies in size from month-to-month. In August, this carry-over amounted to 47 percent of the recorded data for imports and 11 percent for exports. The revised data recompiles the trade figures to reflect the actual month of entry for imports and month of shipment for exports. The net effect of these changes is shown in column 4 in the table that follows. These adjustments suggest that at some point there will be a significant revision in the quarterly pattern of net trade in the GNP accounts and in the international transactions accounts. September 27, 1985 U.S. Merchandise Trade (In billions of dollars, seasonally adjusted annual rates) Exports (1) Tears: 1981 1982 1983 1984 233.7 212.2 200.5 217.9 Imports 2/ (2) 273.4 254.9 269.9 341.2 Census Basis 1/--CIF Value Balance 2/ Net Revision 3/ Adj. Balance (4) (3) (5).(3+4) -39.7 -42.7 -69.4 -123.3 n.a. n.a. n.a. -4.3 n.a. n.a. BOP and GNP Bases 4/ Balance -28.0 -36.5 -61.1 -108.3 n.a. -127.6 Quarters: 1983 - 1 2 3 4 200.9 194.8 201.3 205.6 244.6 260.3 280.3 294.7 1 2 3 4 212.0 212.8 221.9 223.8 332.6 332.5 363.6 335.4 -120.6 -119.7 -141.7 -111.6 +4.8 -12.8 +13.4 -22.8 -115.8 -132.5 -128.3 -134.4 -102.3 -102.6 -130.0 -98.2 1985 - 1 2 J-A 222.8 210.5 209.0 353.9 362.2 331.5 -131.1 -151.7 -122.5 +7.6 +11.2 n.a. -123.5 -140.5 n.a. -118.1 -132.0 July Aug. Sept. 229.8 217.5 218.5 395.1 338.6 357.0 -165.3 -121.1 -138.5 +29.0 -5.4 +16.7 -136.3 -121.8 -165.9 -102.4 -121.7 Oct. Nov. Dec. 220.9 220.7 229.7 336.8 343.4 326.1 -115.9 -122.7 -96.4 -35.4 -16.0 -16.9 -151.3 -138.7 -113.3 -104.0 -111.0 -79.7 Jan. Feb. Mar. 232.8 214.2 221.4 356.2 351.6 353.9 -123.4 -137.4 -132.5 +8.7 +18.3 -4.3 -114.7 -119.1 -136.8 -131.8 -98.3 -124.7 Apr. May June 213.3 209.0 209.3 355.5 361.0 370.2 -142.2 -152.0 -161.0 -2.1 -1.5 +37.0 -144.3 -153.5 -124.0 -120.3 -132.7 -143.1 July Aug. 208.9 209.1 335.0 327.9 -126.1 -118.8 -24.0 -150.1 n.a. -117.1 n.a. 1984 - 1984 1985 . I -43.6 -65.5 -79.0 -89.2 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. -126.5 -38.5 -59.0 -68.9 -81.6 Published monthly by the Census Bureau. CIF value includes insurance and freight charges for imports only. This is the net value of the carry-over of documents received too late for inclusion in the appropriate month. These data are not seasonally adjusted. Data as defined and used in the Balance of Payments Account and in the GNP Account - does not include insurance and freight charges for imports. In addition, different seasonal factors are used than in Census basis data. 

Federal Reserve (1985, September 30). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19851001_part1

@misc{wtfs_greenbook_19851001_part1,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1985},
  month = {Sep},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19851001_part1},
  note = {Retrieved via When the Fed Speaks corpus}
}