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Not f o r P u b l i c a t i o n ^CONTROLLED AFTER SIX MOUTHS H.lii September lii, 1959. CAPITAL MARKET DEVELOPMENTS The volume of new public s e c u r i t y f i n a n c i n g continues t o be small. During t h e week ending September 11, a S t a t e of C a l i f o r n i a bond i s s u e f o r $50 million and a long-term Federal National Mortgage Associat i o n debenture i s s u e f o r #L50 m i l l i o n were the only l a r g e o f f e r i n g s made; no corporate i s s u e s were o f f e r e d . The calendar f o r t h i s week i n cludes one corporate i s s u e f o r $18 m i l l i o n , a l o c a l government i s s u e f o r &13 m i l l i o n , and a f o r e i g n government o f f e r i n g f o r $18 m i l l i o n . Bond y i e l d s - Yields i n c r e a s e d l a s t week f o r a l l c a t e g o r i e s of outstanding bonds. The i n c r e a s e i n y i e l d s was s l i g h t f o r c o r p o r a t e , lower grade Sta te and l o c a l and U. S. Government o b l i g a t i o n s , but subs t a n t i a l f o r high-grade S t a t e and l o c a l government bonds. Yields a r e c u r r e n t l y a t record highs f o r a l l c a t e g o r i e s of bonds, except those f o r lower grade S t a t e and l o c a l government bonds, which a r e s l i g h t l y below t h e i r early July peaks. Stock p r i c e s - Stock p r i c e s continued t o d e c l i n e l a s t week and t r a d i n g a c t i v i t y increased. Standard and P o o r ' s index of 500 common stocks closed a t 57.ill on September 11, 2 per cent lower than a week e a r l i e r . Common stock p r i c e s a r e 5 p e r cent below t h e i r high f o r the year but k p e r cent higher than a t the end of l a s t y e a r . The volume of t r a d i n g averaged 2.9 m i l l i o n shares a day. More d e t a i l e d information concerning r e c e n t c a p i t a l market developments i s presented i n the a t t a c h e d e x h i b i t . Capital Markets Section, Division of Research and S t a t i s t i c s , Board of Governors of the Federal Reserve System. HIGH-GRADE LOWER-GRADE BOND BOND YIELDS YIELDS H.Ik Exhibit b Tables f o r Exhibit A High-grade tiond Yields Spread between U. S. Govt, and Corporate S t a t e and Aaa l o c a l Aaa S t a t e and l o c a l govt. Aaa 2 / U. S. Govt, long-term 2/ Corporate Aaa 1/ Date (Per cent) 1954 - Low 1957 - High 1958 - High Low 1959 - High Low Aug. lit Aug. 21 Aug. 28 Sept. it Sept. 11 g / . 2.85 4.14 ii.13 3.55 4.49 1.09 (4/23) (9/27) (10/10) (5/2) (9/11) (1/9) 4.42 4.42 • 4.44 ii.ii? U.i*9 2.ii5 3.76 3.8U 3.07 it. 25 3.83 (0/6) (10/18) (12/26) (4/25) (9/11) (1/2) 4.06 4.08 4.15 4.24 4.25 1.90 3.45 3.31 2.61* 3.59 3.06 (9/2) (8/29) (9/11) (5/1) (9/10) (3/26) 3.43 3.43 3.a 3.52 3.59 .30 .60 .51 .22 .39 .16 .30 .47 .72 .34 .92 .57 .36 .34 .29 .23 .24 .63 .65 .71 .72 .66 Lower-grade Bond Yields Corporate Baa 1 / S t a t e and l o c a l govt. Baa j / 1954 - Low 1957 - High 1958 - High Low 1959 - High Low 3.44 5.10 4.96 4.51 5.14 4.83 2.93 4.51 4.34 3.64 4.46 3.92 Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 g / 5.09 5.09 5.11 5.13 5.14 WSate Spread between Aaa and Baa S t a t e and Corporate l o c a l govt. (Per cent) (12/31) (11/29) (1/3) (7/11) (9/11) (4/17) 4.37 4.35 4.35 4.38 4.41 (8/5) (8/29) (9/11) (5/D (7/2) ( 3/26) .52 1.27 1.20 .77 .77 .56 .96 1.21 . 1.11 .93 .98 .82 .67 .67 .67 .66 .65 .94 .92 .91 .86 .82 g/ Preliminaiy. 1/ Weekly average of d a i l y f i g u r e s . Average term of bonds included i s 25-26 y e a r s . 2 / Weekly average of daily f i g u r e s . The s e r i e s includes bonds due or c a l l a b l e in 10 years or more. j}/ Thursday f i g u r e s . Only general obligation bonds a r e included; average term i s 20 y e a r s . Note.—highs and lows a r e f o r individual s e r i e s and may be on d i f f e r e n t dates f o r different series. v STOCK MARKET T VOLUME l»5t MORTGAGE 19S7 AND BOND Monthly ~T MSI 1159 YIELDS Per ten t Exhibit D - Tables f o r Exhibit C Stock Market Date Stock p r i c e index 1 / 1959 - High Low 1953-1958 - High Low 54.11 22.95 60.51 54.37 July August Aug. 21 Aug. 28 Sept. 4 Sept. 11 j)/ 59.74 59.40 59.08 59.49 58.54 57.41 Common Trading volume y y i e l d s 2 / (millions (per cent) of shares) (12/24/58) (9/18/53) (7/31) (2/6) Stock market customer c r e d i t Customers 1 Bank Total debit b a l - loans to ances 4 / "others" 5 / (Mil]Lions of d o l l a r s ) 3.30 6.25 3.08 3.34 4.9 0.9 4.3 2.1 4,492 2,055 4,721 4,527 3j285 1,314 3,388 3,253 3.12 3.13 3.16 3.13 3.18 3.24 3.2 2.4 2.4 2.1 2.3 2.9 4,648 n.a. n.a. 3,374 n.a. n.a. n.a. n.a. n.a. 1,317 669 1,332 1,210 1,274 1,259 1,264 1,259 1,273 n.a.—Not available. g/ Preliminary. 1 / Standard and P o o r ' s T m p o s l t e Index of 500 common s t o c k s , weekly c l o s i n g p r i c e s , 1941-43=10, Monthly d a t a a r e a v e r a g e s of d a i l y f i g u r e s r a t h e r t h a n of F r i d a y s ' o n l y . Highs and lows a r e f o r F r i d a y s ' d a t a o n l y . 2 / Standard and P o o r ' s composite s t o c k y i e l d based on Wednesday d a t a c o n v e r t e d t o weekly c l o s i n g p r i c e s by F e d e r a l R e s e r v e . Y i e l d s shown a r e f o r d a t e s on which p r i o e index reached i t s h i g h o r low. 3 / Average a of d a i l y t r a d i n g volume on t h e New York Stock Exoliange. 4 / End of month f i g u r e s f o r member f i r m s of t h e New York Stock Exchange which c a r r y margin a c c o u n t s ; e x c l u d e s b a l a n c e s secured by U. S . Government o b l i g a t i o n s . 5 / Wednesday f i g u r e s f o r weekly r e p o r t i n g member banks. Excludes l o a n s f o r p u r c h a s i n g or c a r r y i n g U. S. Government s e c u r i t i e s • P r i o r t o J u l y 1 , 1959, such l o a n s a r e excluded only a t banks i n New York and Chicago. Weekly r e p o r t i n g hanks acco u n t f o r about 70 p e r c e n t of l o a n s t o o t h e r s . For f u r t h e r d e t a i l see B u l l e t i n . Mortgage and Bond Yields 1/ FHA mortgages 2/ • Spread between new Aaa coiporate corporate bonds and bonds 1/ FHA mortgages|Seasoned bonds New 3/ |Seasoned 4/ 1953-1958 - High Low 1959 - High Low 5.63 (11/57) it. 56 (2/55) 5.75 5.57 L. 81 (6/57) 2.71 (3/54) 4.82 4.29 4.12 (9/57) 2.85 (4/54) 4.47 4.12 1959 - May June July August 5.64 4.81 4.37 4.46 4.47 4.43 Date 5.75 4.82 4.80 4.74 1.96 .54 1.29 .83 .90 -.12 .44 .15 .83 .89 .95 n.a. .44 .36 .33 .31 i f Neither mortgage nor bond y i e l d s t a k e i n t o a c c ount s e r v i c i n g c o s t s which a r e much h i g h e r f o r mortgages t h a n bonds. G e n e r a l l y , bonds pay i n t e r e s t s e m i - a n n u a l l y ; m o r t g a g e s , monthly. Mortgage y i e l d s , i f computed a s e q u i v a l e n t t o a semiannual I n t e r e s t I n v e s t m e n t , would be s l i g h t l y h i g h e r t h a n g i v e n i n t h e t a b l e . 2 / Based on FHA f i e l d - o f f i c e o p i n i o n s a b o u t average b i d p r i c e s I n t h e p r i v a t e secondary market f o r new-home mortgages f o r Immediate d e l i v e r y . Since l a t e 1955, d a t a r e l a t e only t o 25-yeor m o r t a g e s w i t h downpayments of 10 per cent o r more, weighted by probable volume of t r a n s a c t i o n s . Y i e l d s computed by FOB, assuming 25-ycnr mortgages a r e p a i d o f f I n 12 y e a r s . Danhed l i n n s I n d i c a t e p e r i o d s of a d j u s t m e n t t o changes I n t h e c o n t r a c t u a l i n t e r e s t r a t e . 3 / F i r s t N a t i o n a l City Bank of New York. Averages of o f f e r i n g y i e l d s of a l l new I s s u e s of p u b l i c l y - s o l d bonds r a t e d Aoa, Aa or A by Moody's I n v e n t o r s S e r v i c e ( e x c e p t s e r i a l and c o n v e r t i b l e i s s u e s and o f f e r i n g s of n a t u r a l gas and f o r e i g n oompunieo) weighted by s i z e of i s s u e . Y i e l d s on Aa and A i s s u e s a r e f i r s t a d j u s t e d t o a n Aaa b a s i s by t h e spread between y i e l d s of o u t n t a m l i n * bonds i n t h e s e c a t e g o r i e s and t h o s e on A a a - r a t e d bonds. The s e r i e s r e f l e e t s crvin/7oo i n I n d u s t r i a l oomp o a l t l c n , im.'tiirity, t > p e , e t o . of new o f f e r i n g s , 4 / b o o t y ' s I n v e s t o r a S e r v i c e . Monthly tiver*g* 9 of d a i l y d a t a . See E x h i b i t B. H.lii Exhibit E Long-term Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1959 Corporate 1/ 1 19 58 1 81*0 728 January February March £ April May June 899 791 871; July August September e/55d e/775 e/650 1st 2nd 3rd I*th quarter quarter quarter quarter 1 s t half Three q u a r t e r s Year 2,216 eA',975 e/6^755 S t a t e and l o c a l 2/ 1 195b 1 1957 1957 1959 1,060 1,065 1,320 636 856 61*5 812 953 511 71*2 572 506 '•IS? 887 765 .1,153 930 . 592 980 798 895 551 765 51*6 393 1,107 51*0 1,111* 1,003 921* 973 2/51*8 e/500 e/h!5 806 1*03 651 529 581* 1*31 1*56 698 633 698 862 518 920 October November December New ca p l t a l 3,139 2,623 2,760 2,300 5,762 8,522 10,823 . ' 1,090 789 1,076 3,as 3,Ik? 2,899 2,95b . 6,59k 9,|,93 12,W a2,138 e/liay " " 1,860 1,365 I*,520 1,820 1,701* 1,5a 2,029 3,521* 5,069 7,099 Excluding f i n a n c e companies hj 1st 2nd 3rd l*th quarter quarter quarter quarter 2,011 2,1(09 eA,675 Year 2,899 2,586 2,731 2,213 3,237 2,869 2,582 2,810 10,1*29 11,518 1/ Securities and Lxohenge Commission estimates of net proceeds, 2/ Investment Bankers Association of America estimates of principal amounts, 3 / Includes #718,3 million AT&T convertible debenture i s s u e , k/ Total new capital issues excluding offerings of s a l e s and consumer finance companies. 11. Ik Exhibit F Other Security Offerings 1/ ( I n m i l l i o n s of d o l l a r s ) Long-term Foreigr government 2/ Federal agency 3/ 1959 ) 1958 I! 1957 1959 1 1958 >- 1957 January February March 77 59 2 196 53 81* 1*9 30 April May June 56 50 1*2 139 198 120 123 1*8 1+2 July August September 9 5 17 28 7 30 16k October November December 58 123 71* 1* 60 1 %20 Year 992 199 175 — 190 1*28 295 563 8! 205 337 153 289 •s§ 272 272 252 231 1*15 21*3 303 91* 1*59 3,910 3,271* ii60 273 26I4 2/215 — — 523 125 60 — 215 . 100 — — 2,321 S t a t e and l o c a l government U/ 326 1*55 11*7 72 — 507 233 1,163 251 572 Federal agency 3/ 371 208 11*1* 1*30 505 675 209 161 329 1*69 501 727 365 1*37 206 330 370 512 1*51* 111* 137 1,238 255 116 359 500 1*89 I486 289 3,098 638 336 22I4 5,51*3 e / Estimated. g / Preliminaiy. 1 / Data presented in t h i s exhibit d i f f e r from those i n Exhibit E i n t h a t r e f u n d ing i s s u e s , as w e l l as new c a p i t a l i s s u e s , are included. Long-term s e c u r i t i e s are def i n e d as those maturing i n more than one year. 2/ Includes s e c u r i t i e s o f f e r e d i n the United S t a t e s by f o r e i g n governments and t h e i r subdivisions and by i n t e r n a t i o n a l o r g a n i z a t i o n s . Source: S e c u r i t i e s and Exchange Commission. 3 / Issues not guaranteed by the U. S. Government. Source: long-term, S e c u r i t i e s and Exchange Commission; short-term, Federal Reserve. h j P r i n c i p a l l y t a x and bond a n t i c i p a t i o n n o t e s , warrants or c e r t i f i c a t e s and Public Housing Authority n o t e s . In some instances PtiA n o t e s included may have a somewhat l o n g e r t e r n than one year. Source: Bond Buyer. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis H.l4 Large Long-term Public Security I s s u e s f o r New Capital (Other than U. S. Treasury) 1 / Proceeds of Large I s s u e s Offered (Millions of d o l l a r s ) Month Corporate 1958 - August September October November December 1959 - January February March April May June July August S t a t e and l o c a l government 209 825 259 227 305 369 340 215 359 342 284 110 363 Other 2/ 109 288 172 259 229 335 551 369 563 258 635 194 263 18 209 100 79 174 35 176 20 50 60 50 98 Large I n d i v i d u a l Issues Offered September 1 through 11 Issuer Type J / Amount Coupon (millions rate or Offering Maturity of net i n t e r - y i e l d dollars) est cost Rating CORPORATE Associates Investment Co. Deb. 50.0 G.O. G.O. 12.5 22.5 1979 5 1/8 5.13 STATE AND LOCAL GOVERNMENT Los Angeles, C a l i f o r n i a State of Connecticut Allegheny Co.San.Dist.,Pa, Serial , Term S t a t e of C a l i f o r n i a Rev•—Ut. Rev.-Ut. G.O. 1960-79 1961-87 1961-81 7.5 1996/65 7.5 50.0 1961-85/80 3.88 3.73 2.75-4.00 2.60-3.75 4.24 4.01 3.00-4.00 4.30 3,00-4.00 5 l/b 5.26 OTHER Fed. Nat. Mtg. Assoc. Deb. 150.0 1961 Aa Aaa G-2 Footnotes n.a.—Not a v a i l a b l e . 1 / Includes corporate and other s e c u r i t y o f f e r i n g s of *15 m i l l i o n and over; S t a t e and l o c a l government s e c u r i t y o f f e r i n g s of §10 m i l l i o n and over. 2 / Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and Development i s s u e s and ncn-guaranteed i s s u e s by Federal agencies. 3 / In the case of State and l o c a l government s e c u r i t i e s , G.O. denotes general o b l i g a t i o n s ; Rev.-Ut., revenue o b l i g a t i o n s secured only by income from public u t i l i t i e s ; Rev.-Q.Ut., revenue bonds secured only by revenue from q u a s i - u t i l i t i e s ; Rev.-S.T., revenue bonds secured by revenue from s p e c i f i c taxes only; Rev.-Rent., revenue bonds secured s o l e l y by l e a s e payments. Exhibit H H.ll* Forthcoming Large Long-term Public Security Offerings, f o r New Capital (Other than U. S. Treasury) 1 / Expected Proceeds from Forthcoming Large I s s u e s Date of computation 1958 - Aug. 29 Sept. 30 Oct. 31 Nov. 28 Dec. 31 1959 - Jan. 30 Feb. 27 Mar. 31 Apr. 30 May 29 June 30 July 31 Aug. 31 Subsequent t o Airing month following d a t e shown date shown S t a t e and Other 2 / Q u o r a t e Corporate l o c a l govt. 785 113 20 1* 301 210 270 198 396 21*6 287 165 238 198 2U1 229 261 551 292 550 254 21*7 11*6 50 $ 25 s675 9ilt 216 326 1*01 370 365 279 1*76 3U6 332 272 305 517 71 ?! 20 50 2/ 683 71 m 1*81 761 517 761 500 1*06 § 1*02 25 20 50 50 Forthcoming Large O f f e r i n g s , as of September 11 Amount Approximate date (millions of o f f e r i n g of d o l l a r s ) Type CORPORATE Georgia Power Co. New England Telephone & Telegraph Co. Sylvania E l e c t r i c Products, Inc. Southern C a l i f o r n i a Gas Co. Hooker Chemical Corp. Union E l e c t r i c Co. Boston Edison Co. Southern New England Telephone Co. ^Columbia Gas System, Inc. American Telephone & Telegraph Co. Commerce Oil Refining Corp. 1 s t mtg. bds. Deb. S.F. deb. 1st mtg. bds. Conv. deb. 18.0 1*5.0 25.0 30.0 25.6 Com. s t k . 31.1 1 s t mtg. bds. Com. s t k . 15.0 18.8 Deb. Deb. Deb., bds. & com,. 25.0 250.0 * 1*5.0 ! STATE AND LOCAL GOVERNMENT A t l a n t a , Georgia *Indianapolis-Marion Co., Ind. *0range Co. Flood Cont. D i s t . , C a l i f . Cook Illinois Digitized for Co., FRASER Sept. 18 Sept. 21 Sept. 22 Sept. 30 Sept. 30 ( r i g h t s expire) Sept. 30 ( r i g h t s expire) Oct. 1 Oct. 9 ( r i g h t s expire) Oct. 9 Nov. 17 1959 G.O. G.O. G.O. G.O. 12.5 32.0 12.0 1|1*.0 - Sept. Sept. Sept. Sept. 15 20 22 22 h.lk H-2 Forthcoming Large O f f e r i n g s , as of September 11 (Cont'd) Type Amount Approximate date (millions of o f f e r i n g of d o l l a r s ) STATE AND LOCAL GOVERNMENT (Cont'd) xPort of New York Authority Oakland Unif. Sch. D i s t . , C a l i f . ^ D e t r o i t , Michigan -x-State of M i s s i s s i p p i Denver, Colorado State of I:% > Hampshire Chesapeake Bay Ferry Commission Rev.-Ut. G.O. G.O. Rev.-Ut. G.O. G.O. Rev.-Ut. 25.0 10.0 15.9 12.0 17.0 16.0 190.0 Bds. 25.0 Sept. 2h Sept. 29 Sept. 29 Sept. 30 Oct. l h Oct. 15 Indefinite OTHER Commonwealth of A u s t r a l i a Sept. 18 *—Included i n t a b l e f o r f i r s t 1/ Includes corporate and o t h e r i s s u e s of $15 m i l l i o n and over; S t a t e and l o c a l government i s s u e s of $10 m i l l i o n and over. 2/ Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and Development i s s u e s and non-guaranteed i s s u e s by Federal agencies. Note.—Deletions f o r reasons o t h e r than s a l e of i s s u e : None. H.l4 Exhibit I Yields on New and Outstanding E l e c t r i c Power Bonds, Rated Aa and A 1 / A-rated o f f e r i n g y i e l d s Aa-rated o f f e r i n g y i e l d s Amount above Amount above Actual Actual ( p e r cent) seasoned y i e l d s 1 ( p e r cent) seasoned y i e l d s (basis points) (basis points) Date 1952 - 1958 High Low 5.00 ( 9 / W 5 7 ) 2.93 ( 3 / 3 1 / * ) 1959 - Jan. 7 20 28 Feb. 18 Mar. 11 § 31 Apr. 3 15 16 29^ May 1 13 Ik 20 21 26 June k 17 26 July 9 10 15 30 Aug. 5 20 1 87 -3 I1.60 3k B S 4.43 k-k3 4.47 9 9 13 k.60 22 tt* *; 4.95 1.95 38 3k 5.00 4.95 38 29 4.93 31 4.85 4.80 24 22 5.50 (11/7/57) 3.00 (3/17/54) 123 -15 4.752/ 23 4.67 18 4.85 5.06 17 13 5.13 27 4.92^/ 5.10 5.10 6 24 19 5.10 5.00 19 13 *—Single observation, not an average. 1 / Covers only 30-year f i r s t mortgage "bonds, a s reported i n Moody's Bond Survey. Except where i n d i c a t e d , the a c t u a l y i e l d f i g u r e and.the amount above seasoned y i e l d s a r e averages of o f f e r i n g s during t h e i n d i c a t e d period and of t h e d i f f e r e n c e s between these new o f f e r i n g y i e l d s and y i e l d s on seasoned i s s u e s of s i m i l a r q u a l i t y f o r the same day. Average maturity f o r t h e seasoned i s s u e s v a r i e s from 26 t o 28 y e a r s . 2 / Provides f o r a 5-year period during which i s s u e may not be c a l l e d f o r refunding a t a lower coupon r a t e . Monthly averages so marked include one o r more i s s u e s with such a . p r o v i s i o n . Other i s s u e s have no such p r e v i s i o n . 2 / Provides f o r a 7 - y e a r period during which issue may n o t be c a l l e d f o r refunding a t a lower coupon r a t e .