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BOARD O F GOVERNORS O F T H E F E D E R A L R E .

MEMO
To:

-Data

Tjme______

Chairman Burns

_

S. H. Axilrod

From:,

T l No,.
e.
_

8/2/73

<VE S Y S T E M

E x t..

P le a s e cafl

For your approval

Returned your call

For your information

Will c a ll again

Note and return

Phone me re attached

For comments and suggestions

See me re attached

.

Preparation of reply

MESSAGE:

Attached is a brief memo on
Treasury financings and even

o n ^ •>

h,
keel in 1972 and a table showing

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> jCj’
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the amounts and timing of financing outside the bill area for
background for your testimony.

BOARD OF GOVERNORS

FE D E R A L R E S E R V E S Y S TE M

Office Correspondence
Tn

Hr, Axilrod________ ___________

FtAT> Fred S t r u b i e ______ ;
T

-

D a te .Augus t . 1 »— .7-S..
13

Subject: Even Keel Constraint in L972
____________________________________

In addition to its regular sales of-bills on a weekly-and—monthly
basis, the U.S. Treasury conducted 7 financing operations of coupon issues
in 1972. Only four of these operations--those involving quarterly refunding
of securities--however, were of a type which traditionally would be thought
to impose an even keel constraint on System activity* And in none of these
four does it appear that this constraint seriously impeded a timely and
effective execution of monetary policy measures.
On December 27, 1972, however, the Treasury announced that it
would auction $625 million of bonds with 20 years to mature in early January
of this year, and this financing operation did inhibit the desk from exer­
cising as much restraint on the growth of reserves as otherwise would have
been desirable. It will be recalled that, as a consequenc of an unacceptably rapid pickup in the growth rate of
and other aggregates in December,
the Committee changed the range of tolerance for the funds rate to 5-1/8—
5-7/8 per cent from the previous range of 4-3/4— 5-1/2 per cent at its
December meeting. The desk, however, delayed introducing a degree of re­
serve restraint that would have pushed the funds rate to the upper end of
this range until after the January 10 settlement date for the bond, even
though the continued behavior of the monetary and reserve aggregates over
this period warranted such action.
Attached is a summary table showing the announcement date and
size of Treasury note and bond offerings in 1972 and thus far in 1973.




Treasury Financing Operations in 1972 and 1973

Date of
Announcement

Type of' Financing

Nature of Issue(s)

Total Amount Issued
____ to Public____

1972 F in a n c in g s

Jan.

26

Rights Exchange and
Advance Refunding

4 - 1 / 4 y e a r n o te and
1 0 -y e a r bond

4 .0

1. 8

March

21

Auction

3 -y e a r

April

26

Auction

1 -y e a r n o t e ,
y e a r bond

Rights Exchange and
Advance Refunding

n o te
9 -3 / 4

3 -1 /2 y e a r n o te , 7 - y e a r
n o t e , 1 2 -y e a r bend

1.8
8.2

J u ly

26

O c t.

5

Auction

2- y e a r n o te

2.1

O c t.

25

Auction

4 - y e a r n o te

2 .9

D ec.

14

Auction

2- y e a r n o te

2.1

1973 F in a n c in g s

Dec.

27,

1972

Jan.

31

Jan.

31

April




25

Auction
Rights Exchange

.6

2 0 -y e a r bond
3 -1 /2 y e a r n o te

2 .5

Auction

6 - 3 / 4 y e a r n o te

1.0

Auction

7 -y e a r n o te ,
bond

2 .7

2 5 -y e a r


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102