Full text of H.16 Capital Market Developments : November 23, 1959
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Not for Publication DECONTROLLED AFTER SIX-MONTHS H.lU November 23, 1959 • CAPITAL MARKET DEVELOPMENTS (Including Monthly Review of Sources and Uses of Funds of Financial Intermediaries) The volume of public security financing for new capital last week was very large, but is expected to be very small during this holidayshortened week. During the week ending November 20, corporations sold large issues, including a $250 million AT&T debenture issue, with aggregate proceeds of $336 million. State and local government issues amounting to $128 million were also sold. The calendar for this week includes only two corporate offerings totaling $31 million and one State and local government issue for $10 million. Bond yields - Changes in yields on outstanding bonds were mixed last week. Yields on corporate bonds continued to remain stable, while those on State and local government bonds declined. Yields on U. S. Government obligations increased. Housing starts - Private nonfarm Housing starts declined more than seasonally in October, and dropped nearly 11 per cent to a seasonallyadjusted annual rate of 1,180,000 units, according to preliminary Census Bureau estimates. This was about one-sixth below the peak level in April, and the lowest rate in fifteen months. Through October of this year, the cumulative total of private starts remained slightly ahead of the same period in 1955 and close to the record pace set in 1950. The relative distribution of starts by type of financing, however, was different. So far this year, 6? per cent of all private starts were financed by conventional mortgages or without borrowing5 in the same period of 1955# the percentage was lt9» and in 1950, it was 51. The remainder was financed by Federally-underwritten mortgages. ing that totaling occurred "others" Stock market credit - Customer credit in the stock market (excludon U. S. Government securities) continued to decline in October, $U.U billion at the end of the month. The decline of %li2 million primarily in net debit balances as the decline in bank loans to was slight. Borrowing by member firms of the New York Stock Exchange maintaining margin accounts (excluding borrowing on U. S. Government securities) increased in October. This was the first increase since June and brought the total to $2.2 billion at the end of the month. On the other hand, customers' net free credit balances, amounting to *1.0 billion, declined in October. These and other data on stock market credit for October and September are shown in the table on the following page. fi.lk 2 - End of month October | September Customer credit Excluding U. S. Government securities - total Net debit balances y Bank loans to "others" Net debit balances secured by U. S. Govt, securities Bank loans to others for purchasing or carrying U. S. Government securities Broker and dealer credit Money borrowed except on U. S. Government securities On customer collateral ..Money borrowed on U. S. Government securities Customers' net free credit balances Change *• (Millions of dollars) | kykOl 3,210 1,191 168 3,250 1,193 156 -h2 -iiO -2 +12 158 162 -h 2,178 1,923 227 967 2,Ik? 1,906 231 1,039 +29 +17 -h -72 3 Stock prices - Stock prices, as measured by Standard and Poor's index of 500 common stocks showed little change last week, closing at 56.97 on November 20. Trading activity increased with the daily volume averaging 3-U million shares a day. Institutional investors - Savings inflow in September was one-, half smaller than a year earlier at life insurance companies, about the same at savings and loan associations, and one-fourth smaller at mutual savings banks. In most other months thus far this year life insurance company assets and savings capital at savings and loan associations have increased more than in the comparable months of 1958. However, the growth in deposits at mutual savings banks has continuously been much smaller this year. (The increase in time deposits at commercial banks has also been much less than the very rapid growth last year.) I Combined growth at these three major institutions—life insurance companies, savings and loan associations and mutual savings banks—totaled $10 billion for the first nine months, slightly more than the growth a year earlier. The investment pattern for these institutions has changed little during the first nine months 'of the year as each has continued to invest heavily in mortgages. The increase in life insurance company assets for the first three quarters this year, amounting to $h*k billion, was 6 per cent larger than in 1958. There was a slight net liquidation of U. S. Government securities this year; last year there was net acquisition of these securities. The increase in business security holdings was slightly larger than in the January-September period of 1958. Net acquisitions of mortgages were one-sixth larger than a year earlier. These companies increased their holdings of State and local government securities sharply— nearly twice as much as in the first nine months of 1958. y r - 3 - H.lk Sources and Uses of Funds of Major types of Savings Institutions 1/ First nine months 1953-1958 (In millions of dollars) Uses of funds" State & U. S. Busilocal Govt, ness Cash secur- securgovt, sec. ities ities Other assets . Total Net change sources in deposits Borrowing or savings capital Life Insurance Companies -192 -85 -129 -180 -58 -119 -108 -36 279 -266 -7U6 108 -681 -265 1,720 1,652 1,781 1,558 2,060 1,396 1,191 1,702 2,685 2,322 1,760 1,1*53 kk5 239 2ii 150 k99 111 1,09k 908 827 621 520 950 327 k,k27 a,18L k,006 4,152 k,k6l 1,163 3,578 Savings and Loan Associations -770 lk9 -U72 -3hh -361 198 -93 5,901 3,9M 3,329 3,1+06 1i,M7 3,020 2,720 712 k5k 138 390 3 U6 195 n.a. n • cL* • n.a. k53 166 k29 280 167 72 101* 6,295 k,717 3,722 3,723 k,592 3,33k 2,922 li,513 3,963 3,102 3,352 3,295 i:SS 528 1,25k -21*2 996 739 -119 665 -29k 602 695 622 -266 kk5 -63 l,k83 2,139 l,k70 1,650 1,611 1,677 l,5kk 1,108 1,791 375 318 :1,334 1,388 l,l*k9 1,36k 316 223 228 180 Savings Banks -17k -21* -137 -130 -103 -3k -78 38 -160 -121 -25k -91 -312 -2 -21 601 580 166 -133 298 379 1,1*75 1,568 1,057 1,758 1,098 51 5k 16 28 52 161 71 111* 100 75 82 52 88 75 n.a.—Not available. 1/ For description of data see Exhibits J, K and L. 282 H.1U - U - Share capital at savings and loan associations increased a record $k»5 billion during the first nine months of the year, one-seventh more than last year. Borrowings by these associations rose §528 million, in contrast to a net repayment of $2k2 million in the corresponding period of 19^85 most of the borrowing was from the Federal Home Loan Banks. The increased growth in savings capital, supplemented by substantial borrowing, enabled these institutions to increase their mortgage holdings by a record £5*9 billion in the January-September period, $2 billion more than a year earlier. Net acquisitions of U. S. Government securities were also larger this year. These associations sharply reduced their cash balances by about the same amount as they increased their Government holdings. The growth in deposits at mutual savings banks wastyl.lbillion, two-fifths less than in the first nine months last year. The reduced savings inflow this year was reflected primarily in a slight net liquidation of business securitiesj last year net acquisitions of these securities had totaled over $600 million. The increase in mortgage holdings was only 6 per cent less than a year earlier. (Through March the rate of increase in these holdings had been more rapid than in the corresponding months of 1958.) Savings banks increased their holdings of U. S. Government securities slightly in contrast to a net liquidation last year. More detailed information concerning recent capital market developments is presented in the attached exhibits. Capital Markets Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System. HIGH-GRADE LOWER-GRADE BOND BOND YIELDS YIELDS Exhibit b H.llt Tables for^xhibit A High-grade Bond Yields Date Corporate Aaa 1/ U. S. Govt, long-term 2j Spread between U. S. Govt, and Corporate State and Aaa local Aaa State and local govt. Aaa y (Per cent) 19514 - Low 1957 - High 1958 - High Low 1959 - High Low 2.85 (it/23) 2.45 (0/6) 3.76 (10/18) lull* (9/27) it. 13 (10/10) 3.8U (12/26) % 0 7 (it/25) 3.55 (5/2) It. 57 (11/20) L30 (9/18) 3.83 (1/2) L09 (1/9) Oct. Oct. Nov. Nov. Nov. L56 U.56 ii.57 lt.57 It. 57 23 .30 6 13 20 e / it. 06 it.09 1|.09 •It. 10 It. 13 1.90 (9/2) 3.1*5 (8/29) 3.31 (9/11) 2.6ft (5A) 3.65 (9/2lt) 3.06 (3/26) 3.53 3.1t9 3.W 3.17 3.1a .30 .60 .51 .22 .50 .16 .30 .it7 .72 .34 .92 .53 . .50 .lt7 .1*6 .1*7 .1*1* .53 .60 .61 .63 .72 Lower-grade Bond Yields Corporate Baa 1/ State and local govt. Baa y 1951 - Low 1957 - High 1958 - High Low 1959 - High Low 3.lilt (12/31) 5.10 (11/29) It.96 (1/3) , It. 51 (7/11) 5.29 (10/16) It. 83 (L/17) 2.93 (8/5) It. 51 (8/29) It. 3b (9/11) 3.61t (5/1) it. 1*6 (7/2) 3.92 (3/26) Oct. Oct, Nov. Nov. Nov. 5.28 5.26 5.27 5.27 5.27 U.3U It. 31 It. 31 It. 31 It.28 Date Spread between Aaa and Baa State and Corporate local govt. (Per cent) 23 30 6 1'3 20 2/. .52 1.27 1.28 .77 .77 .56 .72 ^ .70 .70 .70 . .96 1.21 1.11 .93 .98 .79 ;8i .82 .83 .81t .87 £/ Preliminary. 1/ Weekly average of daily figures. Average term of bonds included is 25-26 years. 2/ Weekly average of daily figures. The series includes bonds due or callable in 10 years or more. 2/ Thursday figures. Only general obligation bonds are included; average term is 20 years. Note.—highs and lows are for individual series and may be on different dates for different series. STOCK MARKET 1941-43 Averoge.10 STOCK M J S D M J HSt PRIVATE S D M J 1157 PERMANENT / NONFARM V, MAIKET S CIIDIT D M 1958 DWELLING UNITS J S 1959 STARTED Exhibit D - Tables for Exhibiu C Stock Market Stock price index 1/ Date 1953-1958 - High Low 1959 - High ~ Low 51l.ll 22.95 60.51 51.37 September October Oct. 30 Nov. 6 Nov. 13 Nov. 20 2/ 57.05 57.00 57.52 57.60 56.85 56.97 Common stock yields 2/ (per cent) (12/24/58) (9/18/53) (7/31) (2/6) Trading Stock market customer credit Customers1 volume 2/ Bank (millions Total debit bal- loans to of shares) ances 4/ "others" 5/ (Mil]Lions of do]ilars) 3.30 6.25 3.08 3.3k 4.9 0.9 4.3 2.1 4,k92 2,055 4,761* 4,401 3,285 1,314 3,401 3,210 1,317 669 1,332 1,373 1,210 1,180 3.26 3.2k 3.23 3.22 3.27 3.26 2.7 2.8 3.8 3.5 3.2 3.4 4,443 4,401 n.a. n.a. n.a. n.a. 3,250 3,210 n.a. n.a. n.a. n.a. 1,193 1,191 1,191 1,195 1,193 n.a. n.a.—Not available. g/ Preliminary. 1/ Standard and Poor's '•^mpoalte Index of 500 common stocks, weekly closing prices, 1941-43=10, Monthly data are averages of daily figures rather than of Fridays' only. Hlgha and lows are for Fridaya' data only. 2/ Standard and Poor's composite atook yield based on Wednesday data converted to weekly closing prices by Federal Reserve. Yields shown are for dates on whioh price index reached its high or low. 3/ Averages of daily trading volume on the New York Stock Ebcoluvnge. 4/ End of month figures for member firms of the Mew York Stock Exchange which carry margin accounts; excludes balances secured by U. S. Government obligations. ' 5/ Wednesday figures for weekly reporting member banks. Excludes loans for purchasing or carrying U. S. Government securities • Prior to July 1, 1959, such loans are excluded only at banks in New York and Chicago. 'Weekly reporting hanks account for about 70 per cent of loans to others. For further detail aeo Bulletin. Private Permanent Nonfarm Dwelling Units Started 1/ Date 1958 - Oct. Nov. Dec. 1959 - Jan. Feb. Mar. Apr. May July Aug. Sept. Oct. Unadjusted Total Seasonally Conv, VA FHA ' Unadjusted adjusted annual rate (Thousands of units) 1,303 1,427 1,432 1,364 1,403 1,403 1,434 1,370 1,368 1,375 1,340 E/1,325 2/1,180 113 107 90 84 94 118 137 134 •131 127 125 ' 2/117 2/102 35 26 25 20 20 30 34 34 35 31 31 30 26 15 11 9 7 6 10 11 10 11 11 10 10 9 64 70 55 57 67 78 93 89 85 • S? 84 2/77 2/67 A dwelling unit Is started when excavation begins; all units in an apartment structure are considered started at that time. FHA and VA starts are units started under commitments by these agencies to Insure or guarantee the mortgages. As reported by FHA and VA, a unit Is started when a field office receives the first compliance inspection report, which is made before footings are poured in some cases but normally after the foundations have been completed. Capehart military housing units are excluded. Conventional starts are derived as a residual, although total and FHA and VA starts are not strictly comparable In concept or timing; they include both units financed by conventional mortgages and units without mortgages. Exhibit E H.llt Long-term Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1959 January February March 81+0 71*5 631 April Hay June -899 791 871* July August September 531 718 709 October November December 2/750 &/750 1st quarter 2nd quarter 3rd quarter l*th quarter 2,216 2,56k 1,958 1st half Three quarters Year 1*,780 6,738 New capital Corporate 1/ State and local 2/ I 195B£/| 19?T 1959 I 19SB I 1957 728 857 v 1,553^ 1,060 1,065 1,320 636 856 61*5 812 953 511 71*2 572 506 1,11+0 597 887 IS .1,1*53 931 592 981 798 895 551 765 51*6 393 1,003 924 973 566 516 2/1*88 806 1*03 651 529 581* 1*31 1,090 789 1,076 e/600 2/1*75 1*56 1*71* 1*35 698 633 698 2,276 1,820 1,701* 1,514* 2,029 1 '5°0 1,111* 862 518 920 3,139 2,623 2,760 2,300 5,762 8,522 10,823 Excluding finance coi 1st quarter 2nd quarter 3rd quarter • l*th quarter 2,011 2,1(09 e/1,658 Year 2,138 . 2,501* B/1,571 >61*2 2/6,213 12,m 5 $ 1,365 It,520 76;^ 3,521* 5,069 7,099 nies h/ 2,899 2,586 2,731 2,213 3,237 2,889 2,582 2,810 10,129 11,518 e/ Estimated. £/ Preliminary. r/ Revised. ... 1/ Securities and Exchange Commission estimates of net proceeds, 2/ Investment Bankers Association of America estimates of principal amounts. 3/ Includes #718.3 million AT&T convertible debenture issue, y Total new capital issues excluding offerings of sales and consumer finance companies. Exhibit F H.lii Other Security Offerings 1/ (In millions of dollars) Long-tern Foreign government 2/ Federal agency 3/ 1950 I 1957 1959 1956 1957 1959 JanuaryFebruary March 77 59 2 196 53 April May 56 50 42 139 198 120 July August September n 36 9 5 17 & 30 1 199 72 523 125 175 U8' 42 '28 7 , 30 1,163 251 60 164 215 x/o8 October November December 58 123 74 4 60 1 220 Year 992 507 2,321 ShortState and local government 4/ January February March 190 128 295 April May June 563 July August September 216 167 E/325 October November December Year 100 572 Federal agency 3/ 233 460 273 326 455 147 359 500 489 371 208 144 638 430 505 § 261 205 337 153 486 675 289 209 161 329 336 469 501 289 423 369 272 272 252 727 365 665 137 206 330 224 370 512 231 hl$ 243 303 94. 459 454 114 137 1,238 255 116 3,098 5,543 3,910 3,274 2/ Preliminary. 1/ Data presented in this exhibit differ from those in Exhibit E in that refunding issues, as well as new capital issues, are included. Long-term securities are defined as those maturing in more than one year. 2/ Includes securities offered in the United States by foreign governments and their subdivisions and by international organizations. Sourcei Securities and Exchange Commission. y Issues not guaranteed by the U. S. Government. Source; long-term, Securities and Exchange Commission; short-term, Federal Reserve. 4/ Principally tax and bond anticipation notes, warrants or certificates and Public . Housing Authority notes. In some instances PMA notes included may have a somewhat • longer term than one year. Source: Bond, Buyer. Exhibit 0 H.llt Large Long-tern Public Security Issues for New Capital (Other than D. S. Treasury) y r ~ Proceeds of Large Issues Offered (Millions of dollars) Month 1958 - October November December 1959 - January February March April . May June July August September October j Corporate State and local government k 259 227 305 369 31*0 215 359 31*2 281* 110 363 199 1*00 172 259 229 335 551 369 563 258 635 191* 263 211* 291* Other 2/ 209 100 79 17k 35 176 20 50 60 50 98 175 20 Large Individual Issues Offered November 1 through 20 Issuer Type 2/ Amount Coupon (mil) .ions rate or Offering Maturity net inter- yield Rating of dollars) est cost CORPORATE Sylvania Elec. Prod., Inc. S.F. deb. 25.0 " 1981* Tenn. Gas Transm. Co. Pfd. stk. 29.5 U.S. Fidelity & Guaranty Ca Cap. stk. 21*. 1 Amer. Tel. & Tel. Co. Deb. 250.0 1986 Transwestern Pipeline Co. Sub.deb.&stk. 61.5 1969 STATE AND LOCAL GOVERNMENT Humboldt Bay Mun. Water Dist., California G.O. State of Mississippi G.O. State of South Carolina G.O. State, of Delaware G.O. Chicago, Illinois G.O. Los Angeles Dept. of Wtr. & Pwr., California Rev.-Ut. State of New York G.O. Philadelphia, Penna. G.O. OTHER 10.7 1961*-98/7l* 11*. 0 1960-75 10.0 1960-79/71* 16.1* 1960-79 10.0 1961-77 5 1/2 5.50 Baa 5 3/8 5 5.22 n.a. Aa 3.25-1*. 15 2.80-3.60 2.60-3.30 2.60-3.35 2.80-3.70 A Aa Aa Aa A 1*.12 3.59 3.21* 3.29 3.68 12.0 1960-89/61* 3.75 55.1 1961-2009/99 3.1*8 2l*.8 1961-90 3.71 — 2.80-3.80 Aa 2.65-3.90 Aaa 2.90-U.25 A G-2 Footnotes 1/ Includes corporate and other security offerings of $l£ million and over; State and local government security offerings of $10 million and over, 2/ Includes foreign government and International Bank for Reconstruction and Development issues and non-guaranteed issues by Federal agencies. 2/ In the case of State and local government securities, G. 0, denotes general obligations; Rev.-Ut., revenue obligations secured only by income from public utilities; Rev.-Q.Ut., revenue bonds secured only by revenue from quasi-utilities; Rev.-S.T,, revenue bonds secured by revenue f rom specific taxes only; Rev.-Rent., revenue bonds secured solely by leasel payments. H.lk Exhibit H Forthcoming Large Long-term Public Security Offerings for New Capital (Other than U. S, Treasury) 1/ Expected Proceeds from Forthcoming Large Issues Date of computation 1958 - Oct. 31 Nov. 28 Dec. 31 1959 - Jan. 30 Feb. 27 Mar. 31 . Apr. 30 - May 29 June 30 July 31 Aug. 31 Sept. 30 Oct. 30 Subsequent to During month following date shown date shown State and Other 2/ Corporate State and Corporate Other 2/ local govt. local govt. 20k 301 210 270 198 396 21*6 287 165 238 198 37k 385 258 229 261 551 292 550 25k 2k7 lk6 356 385 270 115 71 75 k5 20 50 50 25 — • . 326 koi 370 365 279 k76 3k6 332 272 305 517 69k 509 675 683 515 856 k8l 761 517 761 500 ko6 k02 k70 336 71 75 1*5 20 50 5o 25 —— — Forthcoming Large Offerings, as of November 20 Issuer Type Amount (millions Approximate date of dollars) of offering CORPORATE Potomac Electric Power Co. 1st mtg. bds. Gulf States Utilities Co. - 1st mtg. bds. Consolidated Edison Co. of New York 1st ref. mte. M s . General Telephone Co. of Calif. . 1st mtg. bds. Arkansas Louisiana Gas Co. 1st mfcg. bds. James Talcott, Inc. Senior notes Arkansas Power & Light Co. , 1st mtg. bds. Dallas Power & Light Co. 1st mtg. bds. Public Service Electric & Gas Co. Com. stk. Commerce Oil Refining Corp. Deb., bds. & com 15.0 16.0 -75^-0 30.0 16.0 15.0 15.0 20.0 25.0 k5.0 Nov. 2k Nov. 25 •Dec. 2 Dec. 3 Dec. k Dec. 8 Dec. 9 Dec. 15 Dec. 16 Indefinite Rev.-Ut. Rev.-lit. 10.0 10.0 Nov. 2k Nov. 30 Rev.-Ut. G.O. G.O. Rev.-Ut. G.O. G.O. 15.0 21.5 10.0 13.0 21.6 20.0 Dec. Dec. Dec. Dec. Dec. Dec. STATE AND LOCAL GOVERNMENT Alabama Highway Auth. •^Montgomery Wwks. & Sanit.Swr.Bd. ,Ala. *Salt River Project Agile. lmp._& Pwr. Dlst., Arizona Los Angeles Sch. Diets., California Columbus, Ohio Los Angeles Co., California *State of Massachusetts ^Commonwealth of Puerto Rico 1 1 1 3 3 8 • H.12+ H-2 Forthcoming Large Offerings, as of November 20 (Cont'd) Type Amount (millions Approximate date of offering of dollars) S y E AND LOCAL GOVERNMENT (Cont'd) State of California Chesapeake Bay Ferry Commission ^Credit Foncier de France G.O. Rev.-Ut. Ext. loan bds. 100.0 190.0 50.0 Dec. 9 Indefinite Dec. 10 *—Included in table for first time. 1/ Includes corporate and other issues of &15 million and over; State and local government issues of $10 million and over. 2/ Includes foreign government and International Bank for Reconstruction and Development issues and non-guaranteed issues by Federal agencies. Note.—Deletions for reasons other than sale of issue: New York State Electric and Gas Company's common stock issue—proceeds of less than &15 million. Exhibit I Yields on New and Outstanding Electric Power Bonds, Rated Aa and A 1/ Date 1952 - 1958 High Low Aa-rated offering yields A-rated offering yields Amount above Amount above Actual Actual (per cent) seasoned yields (per cent) seasoned yields (basis points) (basis points) 5.00 (9/14/57) 2.93 (3/31/54) 1959 - January February March April 87 -3 37 4 10 17 May 1 3. 20 21 26 June 4 S July 9 10 15 30 Aug. 5 20 Sept , 18 Oct. 22 23 28 , 29 v 30 : 4.95 4.95 5.00 4.95 £ 38 29 4.93 31 ix.85 4.80 24 22 4=952/ 5.15 46 16 hO 5.15 42 5.SO (11/7/57) 3.00 (3/17/54) 123 -15 23 *4.75%/ *4.67 18 4.85 5.06 17 13 5.13 27 4.92^/ 5.io . 5.10 ; 6 24 19 5.io 5.oo 19 13 5.65 60 5.25 5.40 35 50 *—Single observation, not an average. 1/ Covers only 30-year first mortgage bonds, as reported in Moody's Bond Survey. Except where indicated, the actual yield figure and the amount above seasoned yields are averages of offerings during the indicated period and of the differences between these new offering' yields and yields on seasoned issues of similar quality for the same day. Average maturity for the seasoned issues varies from 26 to 28 years. • 2/ Provides for a 5-year period during which issue may not be called for refunding at a lower coupon rate. Monthly averages so marked include one or more issues with such a provision. Other issues have no such provision. 3/ Provides for a 7-year period during which issue may not be called for refunding at a lower coupon rate. Exhibit J H.l4 Sources and Uses of Funds by Life Insurance Companies (In millions of dollars) Uses of Funds 1/ u. s. 1 Busi- State and Govt. ness local govt. Mort' secursecurgages ities ities ities • 1957,- July Aug. Sept. Oct. Nov. Dec, Value of Assets at End of Year 1958 - Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Value ^-'Assets at E n ^ y t e a r 1959 ^ :-Jan. Feb. Mar. Apr. May July Aug. Sept. -9 -30 47 -17 22 138 5 -32 -32 13 -92 -181 324 163 198 244 212 258 14 11 7 13 10 10 163 195 154 . 170 132 237 1,29k 7,028 42,133 2,377 35,271 171 15 -119 • 11 -70 47 175 42 7 12 25 -139 221 106 277 208 135 194 182 128 201 303 133 394 51 10 23 13 28 35 24 36 19 25 31 13 • 191 125 i4o 113 116 104 123 140 139 186 146 303 1,365 7,205 4u,6i5 2,685 -83 -57 -lit -24 10 3 -15 19 -31 280 -71 -185 22 -16 11 13 95 -185 185 223 251 242 193 242 214 75 95 59 30 66 49 79 , 23 94 30 15 -93 -51 20 -17 71* -20 20 -17 —I.--;'" -19 52 123 37,097 114 139 136. 116 135 157 214 174 211 Total sources or uses 87 77 93 6 110 7 13,206 101,309 111 144 60 19 167 140 46 147 74 53 100 185 652 349 401 347 450 500 570, 476' 439 560 487 879 14,452 107,419 171 174 108 80 97 60 208 101 95 1/ Uses of funds represent net changes in assets and therefore reflec rather than gross, uses. Source: Institute of Life Insurance. 584 384 467 429 394 469 726 438 362 485 498 496 728 494 200 Exhibit K Sources and Uses of Funds ty Savings and Loan Associations (In millions of dollars) Sources of Funds Uses of Funds 1/ Total Net U. S. Mortsources change Other BorrowGovt, gages Cash assets or uses savings ing J/ Other secur2/ capital ities 1957 - July Aug. Sept. Oct. Nov. Dec. Value of Assets at End of Year 1958E/ - Jan. Feb. Mar* Apr. May June July Aug. Sept. Oct. Nov. Dec. Value of Assets at End of Year Jan. Feb. Mar. Apr. May June July Aug. Sept. -320 -103 11 -18 86 2,11*6 lil 2l* 26 -2 23 -91* 357 1*16 278 B 3,173 1*0,01*9 1*1* -19 -1 38 13 81 1*0 111 11*7 107 50 37 -119 173 209 116 38 177 -297 -70 -78 -108 1*1* 338 2,569 107 1*60 191* 21*7 335 398 528 582 533 557 571* 605 1*65 532 3,821 1*5,599 -300 -26 1 -183 28 21*9 -1*1*1* -1*1* -52 296 97 79 106 23 -5 105 21 -10 1*1*0 1*50 -52 252 -37 123 151 79 103 59 1*1*7 6ii* 378 kl 16 10 2,770 1*8,138 1*1,912 1,379 1*,81*7 12 . 8 10 102 100 -37 -80 9 42 131 . 102 -1*1* 131 1*09 553 651* 679 803 196 607 685 735 661 863 l*5o 373 1*81* 356 508 937 62 353 1*1*0 501 1*77 1,073 -377 -127 -89 113 -32 169 -39 55 85 58 1*1 215 58 163 158 185 203 -303 173 199 160 176 11*3 -1*25 1,1*51 5,737 87 60 3,125' 1*10 . 1*27 593 701* 750 81*0 779 728 670 . -53 80 92 153 181 6 -92 17 69 1*80 55, ill* 1*7,926 353 578 765 780 982 1,090 31*8 722 677 -181 100 1*31* 1*08 227 -57 21*1 529 -5 262 1*20 98 601* 63 315 1,090 313 . -313 127 190 \ 31 210 391* . 118 1*1*1* 11*8 85 ^ Preliminary. ' 1/ Uses of funds represent net changes in assets and therefore reflect net, rather thanxgross, uses. Savings and loan associations do not hold business securities and d$ta on holdings of State and local government bonds, presumed to be small, are not available. 2/ 1957 data adjusted to include mortgage pledged shares as currently reported. Advances from Home Loan Banks and other borrowing. Digitized fory FRASER Source! Federal Savings and Loan Insurance Corporation. " Exhibit L H.llt Sources and Uses of Funds byMutual Savings Banks (In millions of dollars) Uses of Funds 1/ Sources of Funds U. S. Busi- State and Net Total local sources change Govt. ness MortCash govt. gages Other or uses Other securin securities itiesi/ deposits ities 1957 - July Aug. Sept. Oct. Nov. Dec. -73 -1*2 27 -21* 6 125 -7 11 -17 -136 -136 -26 Value of Assets 890 7,552 at End of Tear 1958 - Jan. Feb. Mar. Apr. May July Aug. Sept. Oct. Nov. Dec. -60 63 36 -1*7 -5 1*2 -66 -5 18 -8 -38 101 -21 111 -85 -62 -36 11 19 -27 -92 -32 -2 Value of Assets 921 7,266 at End of Year 1959 - Jan.-2/ Feb. Mar. Apr. MayJune July Aug. Sept. -96 119 18'" 39 62 1*5 -111* -Id* 8 13 1*3 -85 -13 -79 -12 3 -2 -32 62 61 55 60 93 75 7 -3 2 -3 7 -7 122 -29 111 28 18 103 ' 12l* - a 100 38 till -9 82 .166 188 -20 108 299 16 90 206 3k 36 1*05 66 76 -18 -51* 72 -106 It, 331 682 20,951 761 35,168 31,695 3,U73 160 86 86 97 120 -2l* 3b 8 31* -6 23 1* 6 1* -19 2h 8 2 2 -3 -1 -7 130 99 165 15U 195 253 193 198 181 195 151 171* 25 20 9 -29 1*0 5 -28 29 29 -1*6 1*3 -3 278 251 31*3 91* 269 2 6k 152 251 237 1*0 123 309 231* 11*9 336 93 181 300 - 88 11*3 267 95 1*2 118 1*1* 102 7 1 88 -36 61* 108 -30 -55 81 -109 1*7 1*,973 725 23,039 855 37,779 -16 6 -31 58 -20 17 -i* 1*1 -33 10 19 1* -1 8 208 125 175 155 161 11*5 179 156 160 -58 32 38 -32 1*5 39 -12 33 31 175 216 330 -10 217 161 32 192 163 -1*7 13 -2 31*, 01*1 122 113 313 6 120 202 -51* 80 197 3,738 53 103 17 -16 97 -1*1 86 112 -31* than gross, uses. 2/ Includes Canadian government and1 political subdivisions, International Bank for Reconstruction and Development, non-guaranteed Federal agehcy and other bonds as well as corporate bonds and stocks. y Adjusted to eliminate the effect of a consolidation of a large savings bank with a commercial bank. Source.--Nat. Assoc. of Mutual Savings Banks and Federal Depbsit Insurance Cozp. November 23, 19$9 Appendix 1 MONEY AND CAPITAL MARKET DEVELOPMENTS IN CANADA There were no large new Canadian issues reported last week either internally or in the New York market, Canadian interest rates showed mixed movements and most spreads between internal rates and comparable United States rates narrowed, especially at the short end of the market* As a result, it ontee again became profitable for funds to move from Canada to the United States, A rough calculation of spread differentials between Treasury bills in the two markets, given in Appendix Table 1-3, showed Canadian yields only 0o58 per cent per annum above U.S. yields; with the 3-month future Canadian dollar at an 0.71 per cent per annum discount below the spot rate, an investor could thus obtain a slight interest gain by shifting from Canadian to U.S. bills. The Government's cash balances continued to increase as a result of large sales of savings bonds to the general puBMfc, Chartered bank loans fell rather sharply but at the same time there was a slight tightening in the banks' liquid assets position. Money market rates - Last Thursday's auction rate on 91-day bills rose very slightly for the second straight week to it,91 per cent compared to L.88 per cent the week before. The 182-day bill rate declined a bit further to 5,18 per cent from 5.2U per cent 7 days earlier. Canadian short money rates thus remained relatively stable in spite of the steep jump in money rates in the United States earlier in the week. These developments made it profitable for short funds to move from Canada to the United States, the reverse of the normal money flow relation between the two countries. The interest arbitrage incentive was net, however, very large. Bond market developments - No large new Canadian security > flotations were reported last week. A $35 million Bell Telephone Company of Canada issue and a $50 million Ontario Hydro borrowing — both anticipated over the past two weeks — have been postponed because of disagreements between borrowers and lending institutions over precise details. On November 13, the City of Montreal was authorized to raise $30 million in the United States market to repay bank loans floated earlier in the year in Canada. Government bond yields (to midweek) showed mixed movements, with a slight rising tendency on balance0 At midweek spreads between comparable Canadian and United States Government securities were» 0,58 0,Wi 0,61 1,08 loOU per per per per per cent on cent on cent on cent on cent on 91-day bills IS 2-day bills a 9-year bond a 20-year bond a 36=year bond Appendix L-2 Very large net purchases of Government Savings Bonds continued to be reported in the Treasury's current campaign. In the four weeks through November 18, sales in excess of redemptions amounted to $6b3 million. Stock prices — Although trading was more active last week, prices of Canadian stocks failed to show any sustained movement away from their average level the week before• At Thursday's close the Montreal industrial average was 1.3 per cent lower than it had been seven days earlier. Appendix ZL-3 Selected Government of Canada Security Yields 3-month Treasury bills!/ Date 1 9 5 U - 5 5 - Low 1957 - HLgh 1958 - High Low 1959 - High Low Oct. 28 Nov. U 11 Intermediate Long- a 0.78 4.08 3.65 0.87 6,16 3.25 2.81 U.81 U.52 3.31 5.30 U.U5 3.13 U.35 U.U2 3.78 5.30 U.U1 5.02 U.83 U.88 li.91 5.22 5.21 5.16 5.10 5.17 5.19 5.15 5.17 Spread between Canadian & U.S. rates long-term 3-mo.. bondMZ billsEZ 1.19 0.U7 2.96 0.30 1.15 1.16 1.11 1.00 0.69 0.79 0.58 Discount on 3-mo. Canadian dollarS/ 1.U2 1.06 0.77 0.71 18 l.Oit Average yield at weekly tender on Thursday following Wednesday date shown7 Government of Canada 2-3/1*. per cent of June 15, 1967-68. Government of Canada 3 - V U per cent of 1979* E / U.S. Government 3 - V U per cent of 1978-83• Government of Canada 3-1/1; per cent of 1979. 5/ Spread between average auction rates: on Monday preceding Wednesday date shown for the United States; on Thursday following Wednesday date shown for Canada. 6/ Spread between 3-montha forward and spot price of the Canadian dollar, expressed as per cent per annum, on Friday following Wednesday date shown. f Sales of new Canadian Government Municipal and Corporate Bonds (in millions of Canadian dollars) 1959 to Nov. 9 Government Provincial Municipal Corporation Less shor'Uterm financing (less than one year) 1958 to Nov. 10 1957 to N o t . 11 7,599 65k 372 6,1,01* 535 7,610 609 385 286 5^90 5J2 961 MB3 hSSL 2,937 3,356 hm. 2,528 Of the above, the following have been sold in New York Provincial 230 170 Municipal 10$ 139 Corporation Ul 112 Source: A. E. Ames & Co., Limited. 277 97 95 365