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 July 2 SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System 1993 TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Employment and unemployment. . . Wages . . . . . . . . . . . . . . Consumer confidence. . . . . . . Business fixed investment . . . Erratum. . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . Table Changes in employment . . . . . . .... Selected unemployment and labor force participation rates . . . . . .... Labor productivity and costs . . . ... Average hourly earnings . . . . . . ... Business capital spending indicators. Chart Other labor market indicators. . . . . Factors influencing wage inflation . . . . S 5 S 7 . Nonresidential construction and selected indicators. . Indicators of consumer sentiment . . THE FINANCIAL ECONOMY Tables . . . . . . . . . Monetary aggregates Commercial bank credit and short- and intermediate-term business credit . Selected financial market quotations . . . . . . . . . . . . . . ..... . . . . . . ...... THE INTERNATIONAL ECONOMY Bundesbank interest rate cuts . . . . The U.S. net international investment position, 1992 8 10 SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Employment and Unemployment The recovery in the labor market appears to have paused in June. Nonfarm payroll employment was up just 13,000, the average workweek for production workers retraced its jump in May, and the civilian unemployment rate ticked back up to 7 percent. More complete estimates raised payroll employment in April, principally because of slightly larger increases in most services industries than previously shown; for May, the rebound in construction jobs now appears to have been less rapid, but retail employment increased a bit faster. Taken together, the data on payroll hours of production or nonsupervisory workers, for the quarter as a whole, rose at a 4.1 percent annual rate. The modest rise in nonfarm jobs in June followed two months of fairly rapid increases. Two industries--construction and services-- accounted for the bulk of the deceleration in employment. In construction, a rebound in hiring from a depressed March level contributed to the pickup in payroll employment growth in April and May, but employment then edged down in June. Among the services industries, the June gains in the large health and business services sectors were relatively small, employment in personal services was little changed after a large gain in May, and jobs in amusement and recreation continued to retrace part of sizable jump in April. In retail trade, monthly gains in employment last month continued to average close to 40,000, but jobs at wholesalers fell noticeably. In contrast to the pattern elsewhere, manufacturing employment has been on a steady slide over the recent three-month period, with monthly declines averaging 56,000; slightly during the first quarter. factory employment had moved up -2In addition to the deceleration in employment, the average workweek of production and nonsupervisory workers retraced its jump in May. The declines in June, like the increases a month earlier, were widespread across service-producing industries. The factory workweek edged down to 41.3 hours last month, slightly below the average earlier in the year. At 34.4 hours, the overall workweek in June was the same as the average for the first four months of the year. The household survey measure of total civilian employment dropped back slightly in June, after a steep increase in May. the same time, unemployed edged up. concentrated among adult workers At Increases in joblessness were (aged 25 years and older); by reason for unemployment, a rise in the number of permanent job losers more than accounted for the increase. The unemployment rates for younger workers, which often are quite volatile during the summer months, were little changed in June. Wages Average hourly earnings of production or nonsupervisory workers declined slightly in June and were up at just a 0.7 percent annual rate over the second quarter. By industry, a deceleration in the rate of wage change was widespread between the first and second quarters, with the noticeable exception of finance, insurance, and real estate. The average rate of increase in this measure of wage change during the first half of 1993 now matches the 2-1/4 percent pace that prevailed in 1992. Consumer Confidence The University of Michigan's composite index of consumer confidence rose 1.2 points in June, owing to a modest improvement in consumers' assessments of expected conditions and no change in their appraisals of current conditions. The June improvement in the -3composite index is small relative to the deterioration seen in the first five months of 1993; the index still stands well below its recent peak in December. Among the questions not included in the composite index, consumers' average appraisal of car-buying conditions remained flat at a relatively high level after posting gains in the previous three months, and respondents' expectations of the change in unemployment worsened slightly. Expected inflation over the next twelve months rose another 0.4 percentage point to 4.8 percent, but average expected inflation over the next five years declined by half a percentage point to 5.2 percent. Business Fixed Investment Updates of the table on page II-22 and the chart on page II-24 of the Greenbook are attached. They show revised data through May on private nonresidential construction put in place. Erratum The sentence on p. I-11 of the Greenbook. which describes the staff projection of productivity should read: "On balance, we expect productivity. . .to rise at a 1-3/4 percent annual rate, on average, over the period from 1993:Q3 to 1994:Q4. .. " CHANGES IN EMPLOYMENT 1 (Thousands of employees; based on seasonally adjusted data) 1991 1992 Q4 1993 1993 1992 Q1 Q2 Apr. May June ------------ Average monthly changes-------Nonfarm payroll employment 2 -72 80 135 162 161 255 215 13 -88 -44 -39 -5 -33 -30 -9 39 30 4 17 59 -26 -22 -5 -5 20 -2 78 29 31 22 123 -12 -9 -3 4 35 3 92 36 47 12 155 7 3 5 7 62 0 77 29 31 7 148 -56 -46 -10 28 43 4 132 26 41 13 243 -72 -54 -18 36 51 11 221 35 67 12 192 -43 -49 6 55 51 5 119 26 32 23 8 -53 -35 -18 -6 26 -3 56 17 23 5 Private nonfarm production workers Manufacturing production workers -71 -29 74 -13 132 1 149 16 132 -39 187 -53 248 -29 -38 -36 Total employment 3 Nonagricultural -62 -53 130 122 196 182 85 145 218 237 -149 -127 857 847 -54 -8 Memo: Aggregate hours of private production -.1 workers (percent change) 34.3 Average workweek (hours) 40.6 Manufacturing (hours) .1 34.4 41.1 .2 34.4 41.2 .1 34.4 41.3 .3 34.5 41.4 .7 34.4 41.5 1.2 34.7 41.4 -1.0 34.4 41.3 Private Manufacturing Durable Nondurable Construction Trade Finance, insurance, real estate Services Health services Business services Total government 1. Average change from final month of preceding period to final month of period indicated. 2. Survey of establishments. 3. Survey of households. SELECTED UNEMPLOYMENT AND LABOR FORCE PARTICIPATION RATES (Percent; based on seasonally adjusted data) Civilian unemployment rate (16 years and older) Teenagers 20-24 years old Men, 25 years and older Women, 25 years and older Fulltime workers Labor force participation rate Teenagers 20-24 years old Men, 25 years and older Women, 25 years and older 1993 1993 1992 Q4 Ql Q2 7.4 7.3 7.0 7.0 7.0 6.9 7.0 18.7 10.8 5.7 5.1 20.0 11.3 6.4 5.7 19.4 11.1 6.3 5.8 19.6 11.0 5.9 5.4 20.1 10.8 5.8 5.4 20.7 10.6 5.8 5.4 19.7 11.4 5.7 5.3 19.8 10.4 5.9 5.6 6.5 7.1 7.0 6.6 6.6 6.6 6.6 6.6 66.0 66.3 66.2 66.0 66.2 65.9 66.3 66.2 51.7 76.8 76.7 56.5 51.3 77.1 76.7 57.0 51.2 77.0 76.4 57.1 51.5 77.3 76.1 56.8 51.9 77.4 76.2 56.8 51.7 76.9 76.1 56.6 52.7 78.0 76.3 56.9 51.4 77.4 76.4 57.1 1991 1992 6.7 Apr. May June -5- OTHER LABOR MARKET INDICATORS Initial Claims for Unemployment Insurance* Thousands Average Weekly Hours* Hours 35.4 35.1 34.8 34.5 34.2 1990 * Including 1991 1992 1993 1990 EUC adjustment. 1991 1992 33.9 1993 Production or non-supervisory workers. Temporary Help* Percent Percent 3 .... --. ...... ~--rt .... -~ Jun 1.8 I II ... ....... ..... 1981 1983 1985 ...... rr 1989 1987 1991 1993 " Employment in personnel services as a share of total private employment. Jobs Hard to Get* percent Labor Force -- Millions Civilian labor force -- 1993 1992 1991 1990 * rom the Conference Board's Survey of Consumer Sentiment. 1990 - -Three-month 1991 moving average 1992 1993 LABOR PRODUCTIVITY AND COSTS (Percent change from preceding period at compound annual rate; based on seasonally adjusted data) 1992 Q2 Q3 Q4 19911 19921 1993 -Q1 1992-Q1 to 1993- Q1 Output per hour Total business Nonfarm business Manufacturing Nonfinancial corporations 2 1.4 1.3 2.6 2.9 2.8 5.2 .7 1.4 5.3 3.2 2.7 3.8 3.4 3.2 7.0 -1.5 -1.6 4.8 1.4 1.4 5.2 2.3 3.6 2.0 4.4 5.0 -2.4 2.2 4.1 4.1 4.7 3.5 3.4 3.0 1.5 2.0 3.6 3.9 3.5 3.4 3.8 3.9 6.3 3.7 3.3 .7 3.2 3.1 3.5 3.9 2.5 1.6 3.0 3.1 2.9 2.6 2.7 2.8 2.1 .5 .6 -2.0 .8 .6 -1.7 .7 .7 -.4 .5 .6 -.6 5.3 5.0 -3.9 1.8 1.7 -1.6 1.5 -1.0 -.4 -1.4 5.4 .4 Compensation per hour Total business Nonfarm business Manufacturing Nonfinancial corporations 2 Unit labor costs Total business Nonfarm business Manufacturing Nonfinancial corporations 2 -1.8 1. Changes are from fourth quarter of preceding year to fourth quarter of year shown. 2. The nonfinancial corporate sector includes all corporations doing business in the United States with the exception of banks, stock and commodity brokers, finance and insurance companies; the sector accounts for about two-thirds of business employment. 3. N.A. Not available. AVERAGE HOURLY EARNINGS (Percentage change; based on seasonally adjusted data) 1 1992 1991 Total private nonfarm Manufacturing Durable Nondurable Contract construction Transportation and public utilities Finance, insurance and real estate Total trade Services 1992 Q4 1993 Q1 1993 Q2 Apr. May June -Annual rate- -Monthly rate- 2.9 2.2 2.3 3.8 .7 -. 1 .4 -. 1 3.0 3.2 2.9 1.5 2.3 2.2 2.5 1.1 2.5 3.4 .0 2.9 2.8 2.3 1.9 2.0 2.1 1.6 3.3 -4.4 .4 .5 .5 .0 .0 .0 .0 -1.1 .1 -.1 .4 -.1 1.5 1.7 .6 2.7 -.3 -.2 .1 .0 4.3 3.0 3.9 3.5 2.1 2.6 5.3 1.4 2.3 4.4 4.9 3.4 4.8 .9 .7 .4 -.1 -.3 1.6 .5 .7 -.8 -.1 -.2 1. Annual changes are measured from final quarter of preceding year to final quarter of year indicated. FACTORS INFLUENCING WAGE INFLATION VACANCY AND UNEMPLOYMENT RATES* Percent Percent Unemployment rate 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 'The vacancy rate is the Conference Board's help wanted index divided by total payroll employment MICHIGAN SURVEY EXPECTED PRICE INFLATION* 1979 1980 1981 1982 1983 1984 * Mean expected inflation over the next twelve months. 1985 1986 1991 1992 1993 Twelve-month percent change 1987 1988 1989 1990 1991 1992 1993 -8- Indicators of Consumer Sentiment Car Buying Attitudes versus Light Vehicle Sales millions of units 18 - Index 160 Michigan Index of Car Buying Attitudes Total Light Vehicle Sales, SAAR - - - 150 16 SJune 14 140 .May \l / 12 A/ , / / -- 130 - 120 - 110 10 1989 1990 100 1991 1992 1993 Consumer Confidence -Michigan - - - Index Index 140 - Conference Board Index 120 .. ..-. 100 - ...... - .. 1989 ... l 1 1m 1990 1991 June iL 11 i 11 11I nI n fi 1992 40 1993 Comparison of Current and Expected Conditions (Michigan Survey) Index i - 150 Current Conditions - - - - Expected Conditions 120 June \ S 1989 1990 / 90 -/ 1991 - 1992 1993 60 -9BUSINESS CAPITAL SPENDING INDICATORS (Percent change from preceding comparable period; based on seasonally adjusted data, in current dollars) 1992 1993 Q3 Q4 .7 3.0 1.0 3.5 1993 Q1 Mar. Apr. May 3.4 2.6 .6 3.1 1.1 3.3 10.1 1.5 4.6 4.4 6.3 3.9 -3.8 -3.8 -7.1 -2.8 1.2 1.3 1.0 1.4 -25.8 4.6 21.3 38.0 -15.3 n.a. 2.0 6.8 3.1 7.0 4.1 -.2 -4.0 2.1 2.5 1.9 6.8 4.2 2.6 4.6 .7 4.4 9.0 3.1 -10.9 1.0 -4.8 2.8 3.7 .4 -2.5 1.2 -1.1 -2.4 6.5 -4.8 -2.2 -12.5 1.0 -5.5 .3 .7 1.4 -.3 2.8 -1.2 4.6 -1.2 .2 -2.2 4.9 6.2 -4.3 -.4 1.8 -5.7 -.3 8.1 3.3 1.6 -.5 3.4 1.1 -11.9 .7 3.1 2.5 1.2 -.8 2.9 4.1 3.5 2.6 14.5 -8.2 -8.8 1.9 2.6 -2.4 9.7 3.3 -26.9 -5.0 22.4 3.1 9.5 -11.3 9.7 14.5 -1.9 13.1 18.3 .0 na. n.a. n.a. n.a. n.a. n.a. Producers' durable equipment Shipments of nondefense capital goods Excluding aircraft and parts Office and computing All other categories Shipments of complete aircraft 1 Sales of heavy weight trucks Orders of nondefense capital goods Excluding aircraft and parts Office and computing All other categories Nonresidential structures Construction put-in-place Office Other commercial Industrial Public utilities All other Rotary drilling rigs in use Footage drilled2 Memo: Business fixed investment 3 Producers' durable equipment 3 Nonresidential structures 3 n.a. n.a. n.a. 1. From the Current Industrial Report "Civil Aircraft and Aircraft Engines." Monthly data are seasonally adjusted using FRB seasonal factors constrained to BEA quarterly seasonal factors. Quarterly data are seasonally adjusted using BEA seasonal factors. 2. From Department of Energy. 3. Based on constant-dollar data; percent change, annual rate. n.a. Not available. -10- NONRESIDENTIAL CONSTRUCTION AND SELECTED INDICATORS* (Index, Dec. 1982 - 100, ratio scale) Total Building - Construction ------ Permits, Contracts, or New commitments 1980 1982 1984 1986 Office 1984 1990 1992 Other Commercial 1986 1988 1990 1992 1984 1986 1988 1990 1992 1988 1990 1992 Institutional Industrial 1984 1988 1986 1938 1990 1992 1984 1986 Six-month moving average for all series shown. For contracts, individual sectors include private & public buildings. All other include private only. New commitments are the sum of permits and contracts. -11MONETARY AGGREGATES (Based on seasonally adjusted data except as noted) 19921 1993 Q12 Aggregate or component Aggregate 1. Ml 1993 Q22 (pe) 1993 Apr. 1993 May 1993 Jun. (pe) 1992:Q4 Level to (bil. $) Jun. 93 May 93 (pe) Percentage change (annual rate) 14.3 1.8 0.3 6.6 -2.0 -3.8 4. M1-A 13.7 6.2 13 14.4 26.7 7 5. 6. 9.1 18.0 9.5 3.7 9% 16 9.6 18.6 10.4 41.1 11 4 7.3 6% 0.0 29.2 8 8A 395.8 -2.6 -5.5 -1% -2.9 1 -2% 2438.9 1.8 -10.2 -12% -34.4 -5.2 -0.1 14.5 -10.1 -2 M2 3. M3 10% 2y% 2% 27.6 10.8 1067.2 3506.1 4170.8 9.3 Selected components Currency Demand deposits 7. Other checkable deposits 8. M2 minus M13 9. 10. 11. 12. 13. 14. 15. 16. Overnight RPs and Eurodollars, n.s.a. General-purpose and brokerdealer money market funds Commercial banks Savings deposits Small time deposits Thrift institutions Savings deposits Small time deposits 17. M3 minus M23 18. 19. 20. 21. 22. Large time deposits At commercial banks 4 At thrift institutions Institution-only money market mutual funds Term RPs, n.s.a. 23. Term Eurodollars, n.s.a. -15.8 -S.5 14.8 -21.5 -2.2 1.6 -7.6 -9.0 -0.2 -19.1 3.7 -47.3 69 17.4 4.3 14.0 -10.3 2.8 0 9.6 1 8 -9 -4 10% 671.4 10 11 304.0 359.2 -5 -3% -3 68.3 336.5 1259.4 4 764.7 -7A -6 494.7 772.1 3 i 429.0 -5.6 -13 -14 343.1 1.1 -15 -6 664.7 -6.6 -13.2 2% 11.7 -16.3 -15.4 -19.6 -17.8 -18.0 -17.5 -3% -2% -8 9.9 10.0 11.2 1.0 4.7 -12.9 -10 -90 -12% 343.6 279.3 64.4 18.2 -14.1 i -3.0 14.4 289 28 36.4 -7.2 -5.4 26.6 -7% 18 202.8 88.0 50.8 7.9 -22.6 9.9 -2.6 9% Average monthly change (billions of dollars) Memo Managed liabilities at com'l. banks (lines 25 + 26) Large time deposits, gross Nondeposit funds Net due to related foreign institutions OtherS U.S. government deposits at commercial banks 6 -4.6 -1.0 -3.6 2.5 2.8 -0.2 -2.1 -0.5 23. -1 680.3 356.2 2.6 3%3 324.1 2.4 0.1 1 2% 9.2 -0.6 -5.2 0.9 -0.5 2Y 5.4 -5.1 83.1 240.9 6 1. "Percentage change" is percentage change in quarterly average from fourth quarter of preceding year to fourth quarter of specified year. 'Average monthly change' is dollar change from December to December, divided by 12. 2. "Percentage change' is percentage change in quarterly average from preceding quarter to specified quarter. "Average monthly change' is dollar change from the last month of the preceding quarter to the last month of the specified quarter, divided by 3. 3. Seasonally adjusted as a whole. 4. Net of holdings of money market mutual funds, depository institutions, U.S. government, and foreign banks and official institutions. 5. Borrowing from other than commercial banks in the form of federal funds purchased, securities sold under agreements to repurchase, and other liabilities for borrowed money (including borrowing from the Federal Reserve and unaffiliated foreign banks, loan RPs, and other minor items). Data are partially estimated. 6. Treasury demand deposits and note balances at commercial banks. -12COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT 1 (Percentage change at annual rate, based on seasonally adjusted data) Dec. credit of Type Level, 1991 to Dec. 1992 1992 Q4 1993 Q1 1993 Apr. 1993 Mar. 1993 May May. 1993 ($billions) Commercial bank credit 1. Total loans and securities at banks 2. Securities 3.6 2.7 1.6 5.1 4.9 8.9 2,984.7 13.0 7.1 11.6 21.6 15.7 5.4 873.4 3. U.S. government 17.5 10.6 14.1 23.8. 16.5 4.3 694.8 4. Other -1.2 -5.6 1.8 13.1 12.3 9.5 178.6 0.2 1.0 -2.4 -1.7 0.5 10.4 2,111.3 -3.2 -2.0 -1.8 -5.4 -6.1 7.1 592.5 2.1 2.4 -2.6 0.1 -0.1 8.0 893.4 6.1 1.7 11.0 8.2 366.9 5. Loans 6. Business 7. Real estate 8. Consumer -1.8 9. Security 18.2 3.7 -14.8 15.6 -34.6 120.6 66.8 1.2 7.3 15.1 -10.1 16.5 0.0 191.7 10. Other -1.3 Short- and intermediate-term business credit -3.3 -3.0 -2.7 -5.9 -6.4 6.2 583.4 2.0 11.4 -30.0 -34.9 5.1 10.2 23.3 -3.1 -2.5 -3.8 -7.1 -5.9 5.6 606.7 9.5 16.6 -9.3 -16.1 31.0 17.5 153.3 -0.8 1.2 -4.9 -8.8 1.3 7.8 759.9 -16.9 -6.8 -10.4 10.8 -10.7 -16.1 22.0 17. Finance company loans to business 4 1.8 1.2 -2.5 6.7 5.1 n.a: 306.7 18. Total (sum of lines 15, 16, and 17) -0.5 1.0 -4.4 -4.2 2.2 n.a. 1,084.0 11. Business loans net of bankers acceptances 12. Loans at foreign branches2 13. Sum of lines 11 and 12 14. Commercial paper issued by nonfinancial firms 15. Sum of lines 13 and 14 16. Bankers acceptances, U.S. trade-related 3 '4 1. Except as noted, levels are averages of Wednesday data and percentage changes are based on averages of Wednesday data; data are adjusted for breaks caused by reclassification; changes are measured from preceding period to period indicated. 2. Loans to U.S. firms made by foreign branches of domestically chartered banks. 3. Acceptances that finance U.S. imports, U.S. exports, and domestic shipment and storage of goods. 4. Changes are based on averages of month-end data. 5. April 1993. n.a. Not available. -131 SELECTED FINANCIAL MARKET QUOTATIONS (Percent except as noted) 1992 Instrument Sept. 4 I 1993 FOMC. May 18 Jul 1 Change to Jul 1, 1993 From Sept. 4 From FOMC. May 18 SHORT-TERM RATES 2 Federal funds 3.19 2.94 3.15 -0.04 0.21 Treasury bills 3-month 6-month 1-year 2.92 2.96 3.06 3.01 3.11 3.26 2.99 3.09 3.28 0.07 0.13 0.22 -0.02 -0.02 0.02 Commercial paper 1-month 3-month 3.22 3.22 3.12 3.15 3.21 3.24 -0.01 0.02 0.09 0.09 3.06 3.06 3.11 3.09 3.13 3.24 3.12 3.17 3.34 0.06 0.11 0.23 0.03 0.04 0.10 3.31 3.31 3.00 3.13 3.06 3.19 -0.25 -0.12 0.06 0.06 6.00 6.00 6.00 0.00 0.00 4.38 6.40 7.29 4.49 6.15 7.02 4.37 5.80 6.69 -0.01 -0.60 -0.60 -0.12 -0.35 0.33 6.31 5.90 5.75 -0.56 -0.15 8.06 7.84 7.48 -0.58 -0.36 7.84 5.15 7.42 4.63 7.34 4.59 -0.50 -0.56 -0.08 -0.04 3 Large negotiable CDs 1-month 3-month 6-month 4 Eurodollar deposits 1-month 3-month Bank prime rate INTERMEDIATE- AND LONG-TERM RATES U.S. Treasury (constant maturity) 3-year 10-year 30-year 5 Municipal revenue (Bond Buyer) Corporate--A utility. recently offered 6 Home mortgages FHLMC 30-yr. fixed rate 1-yr. adjustable rate FHLMC Stock exchange index 3554.86 251.36 440.95 708.85 4475.25 Dow-Jones Industrial NYSE Composite AMEX Composite NASDAQ (OTC) Wilshire 5/27/93 2144.64 3444.39 3510.54 248.64 154.00 243.53 3/10/93 305.24 428.22 435.87 6/4/93 378.56 680.78 703.59 2/4/93 3/10/93 2718.59 4335.06 4445.95 -1.25 -1.08 -1.15 -0.74 -0.65 63.69 61.45 42.80 85.86 63.54 1.92 2.10 1.79 3.35 2.56 i 1. One-day quotes except as noted. 2. Average for two-week reserve maintenance period closest to date shown. Last observation is average to date for maintenance period ending July 7. 1993. 3. Secondary market. 4. Bid rates for Eurodollar deposits at 11 a.m. London time. 5. Based on one-day Thursday quotes and futures market index changes. 6. Quotes for week ending Friday previous to date shown. -14THE INTERNATIONAL ECONOMY Bundesbank Interest Rate Cuts On Thursday, July 1, the Bundesbank announced a reduction in its discount rate of 1/2 percentage point to 6-3/4 percent and a reduction in its Lombard rate of 1/4 percentage point to 8-1/4 percent. The Bundesbank also announced that it would conduct next week's repurchase operations at a fixed rate of 7.30 percent, down about 30 basis points from the rates at which -recent variablerate RPs had been done. The central banks of Switzerland, Sweden, Denmark, Ireland, Austria, Belgium, and the Netherlands preceded and followed the Bundesbank's action with similar rate cuts of their own yesterday. These cuts did Today, France and Spain also cut rates. not come as a complete surprise; most market participants expected that the Bundesbank Council would reduce interest rates at one of its two remaining meetings before the summer recess. Between Wednesday and today, the three-month interbank interest rate in Germany declined about 20 basis points to 7.20 percent. interest rates elsewhere in Europe also declined. Short-term Bond yields in Germany and other European countries edged up between 5 and 10 basis points. The U.S. Net International Investment Position, 1992 The net international investment position of the United States at the end of 1992 was negative $521 billion when direct investment was valued at the current cost of replacing plant and equipment and other tangible assets, according to data released on June 30 by the Department of Commerce; it was negative $611 billion when direct investment was valued at the current stock market value of owners' equity. The position deteriorated in 1992 by $156 billion (on the current cost basis) or $215 billion (on the stock market value basis). The larger negative position reflected both recorded net -15capital inflows in 1992 and estimated changes in asset values largely resulting from price increases in the U.S. stock market, price decreases in several leading foreign stock markets, and depreciation of several major foreign currencies against the dollar. 

Federal Reserve (1993, July 6). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19930707_part2

@misc{wtfs_greenbook_19930707_part2,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1993},
  month = {Jul},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19930707_part2},
  note = {Retrieved via When the Fed Speaks corpus}
}