Full text of H.16 Capital Market Developments : January 23, 1961
The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Mot for L o c a t i o n m m s n MOUTHS January 23, 1961. i i CAPITAL MARKET DEVELOPMENTS IN THE UNITED STATES AND CANADA Part I - United States Corporations sold large issues "with total proceeds of $lt5 million and State and local governments sold bonds aggregating $138 million during the week ending January 20. This week, corporate issues, including the expiration of subscription rights, are expected to total #102 million. Large State and local government bond issues amounting to $97 million are also scheduled for sale. Long-term bond yields - Yields increased last week for all categories of outstanding bonds, except those for high-grade corporate bonds which declined slightly. Yields on new corporate bond issues also declined slightly. A new Aa-rated, first mortgage electric utility bond issue was offered to Investors to yield per cent, 5 basis points lower than the yield for a comparable offering made a week earlier. Short- and intermediate-tern interest rates - Yields on Treasury bills declined last week, but those on three- to five-year Government obligations increased. Other major abort-tezm money rates were unchanged. Housing starts - Housing starts in December declined substantially more than usual for the month to a seasonally adjusted annual rate of 990,000. This was 18 per cent below the November rate and about 21 per cent below the average rate of the first 11 months. Most of the drop was in conventionally financed starts. Especially bad weather in the New England and Middle Atlantic States may have been responsible for some of the decline. Stock market credit - Total customer credit in the stock market, excluding borrowing on U. S. Government securities, increased £112 million in December. Totaling $U.U billion at the end of the month, customer credit was at the highest level in i960 and only 1 per cent less than at the end of 1959. The December increase reflected an $81 million rise in net debit balances and a $31 million rise in bank loans to others than brokers and dealers. Borrowing by member firms of the New York Stock Exchange maintaining margin accounts changed little in December, while customers' net free credit balances increased $73 million. These and other data for stock market credit in November and December are shown in the table on the following page. / -3- End of month Dec. I Nov. Customer credit Excluding U. S. Government securities - total Net debit balances Bank loans to 11 others11 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) k,ko6 3,222 • 1,181* 95 k,29k 3,110. 1,153 99 +112 +81 +31 -k 13k 128 +6 2,133 1,806 1U2 1,135 2,129 1,815 139 1,062 -9 +3 +73 *h Stock prices - Stock prices continued to increase last week; Standard and Poor's index of 500 common stocks closed at 59.96 on January 20, .36 points higher than a week earlier. Trading activity, although somewhat less than the very heavy volume a week earlier, averaged h.l million shares a day. More detailed information concerning recent capital market developments is presented in the attached exhibits. Developments in the Canadian capital markets are presented in Part II at the end of this report. Capital Markets Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System. H L O N G - T E R M B O N D YIELDS i HIGH-GRADE R T /vf U . S . GOVERNMENT T rJ\ ( STATE Il.lll Exhibit B - Tables for Exhibit A Long-term Bond Yields , High-grade Date Corporate Aaa 1/ U. S. Govt, long-term 2/ -5- Spread between U. S. Govt, and State and Corporate local Aaa Aaa State and local govt. Aaa y (Per cent) 1951* 1957 1958 1959 - Low High Low High Low 1960 - High Low 2.85 <l|/23) . U.llt (9/27) 3.55 (5/2) x ll.6l (12/31) U.09 (1/9) U.61 (1/29) It. 23 (9/9) Dec. Dec. Jan. Jan. Jan. i:S k.3k' 23 30 6 13 20 2/ 2.16 (8/6) 3.76 (10/18) 3.07 L37 3.83 k.h2 3.75 (1/25) (12/31) (1/2) B E 3.06 (3/26) (8/5) 3.53 (1/7) 2.99 (9/1) .59 .19 3.12 3.11 3.13 3.14 3.16 .1*8 .53 .50 .1*3 .liO .71* .71 .71 .76 .76 (1/8) Lowyr.-grade Date vZ Corporate Baa 1/ .30 .60 .30 .17 .3U .92 .53 .92 .53 3.86 3.82 3.84 3.90 3.92 lu33 k-32 1.90 (9/2) State and local govt. Baa y .22 .50 . .16 - - Spread between Aaa and Baa State and Corporate local govt. (Per cent) 1951* 1957 1958 1959 - Low High Low High Low 1960 - High Low 3.to (12/31) 5.10 (13/29) U.51 (7/11) Dec. Dec. Jan. Jan. Jan. 5.09 5.09 5.08 5.10 5.11 23 30 6 13 20 e/ £S to1 5.36 (2/12) L 9 8 (9/9) 2.93 (8/5) tSE .52 1.27 .77 3.92 (3/26) U.I46 (1/7) 3.98 (12/22) 1 3.98 3.98 U.03 .75 .71* .75 .77 .79 k.oh k.09 .71 .96 1.21 .93 .98 .79 1.08 .86 .86 .87 .90 .90 . .93 P / Prellalnary. )J Meekly aversge ef dally figures. Averse tens of bqnds Included Is 26-26 years. 2/ Weekly average ef dally figures. The series lnoludss bends due or callable In 10 years er mere. 3/ Thursday figures. Only general obligation bonds are Included; average tem Is 80 years, Hote.—Highs and lews are for Individual series and may be en different dates for different series. STOCK MARKET Exhibit D - Tables for Exhibit C Short- and Intermediate-term Interest Rates / Date Discount rate 1/ Government / 3-month bills 2/ Yields 6-month bills 2/ 3-5 year issues 2/ Spread between yields on 3-month bills and yields on 6-mo. bills|3-5 yr. issues'" (per cent) 195k 1957 1958 1959 - Low High Low High Low I960 - High Low 1.50 3.50 1.75 il.00 2.50 Loo 3.00 .61 3.6U •58 li.57 2.63 it. 59 2.11 Dec. Dec. Jan. Jan. Jan. 23 30: 6 13 20 £ / 3.00 3.00 3.00 3.00 3.00 2.21* 2.18 2.28 2.28 2.25 (6/11) (10/18) (5/29) (12/2U) (2/20) (1/8) (10/28) — 3.02 L.91 2.92 5.07 2.38 (12/26) (12/31) (1/2) (1/8) (12/30) 2.1*2 2.38 2.1*8 2.51 2.16 1.66 U.0I4 2.1l* 5.00 3.70 U.97 3.1*0 (ii/30) (10/18) (6/6) (12/21*) (1/2) (1/8) (12/30) 3.16 3.10 3.39 3.52 3.59 .26 .79 .19 .58 .16 •66 .86 .Oil 1.1*2 .1*0 ' 1.81 .38 .18 .20 .20 .23 .21 1.22 1.22 1.11 1.21* 1.3U Private Date Stock Exchange call loan 1/ Spread between 3-month Prime Finance company Treasury bill yield and rate 1/ finance company paper 3/ paper rates (per cent) 1951* 1957 1958 1959 - Low High Low High Low i960 - High Low 3.00 l*.5o 3.50 5.00 Loo 5.50 l*.5o 3.00 l*.5o 3.50 5.oo Loo 5.oo 1*.50 1.25 (12/31) 3.88 (11/15) 1.13 ( 8 / 8 ) i*. 88 (12/31) 3.00 ( 3 / 6 ) 5.13 ( 1 / 2 2 ) 2.88 (11/1*) Dec. Dec. Jan. Jan. Jan. 23 30 6 13 20 2/ U. 5o l*.5o l*.5o l*.5o l*.5o L5o L5o L5o l*.5o L50 2.91 2.88 2.83 2.81 2.81 .. 0 (12/18) .59(7/19) -35(8/#) .06 (10/9) .13 (12/1*) 1.02(3/25) .22 (1*/15) . .67 .70 .55 .53 .56 1/ Weekly rate shown 1» that In affeet at end of purled. Discount rate Is. for Federal Reserve Bank of New York. Stock exchange call loan rate te going rate on oall loans secured ty oustoners' stock exchange ooll&teral at New York City banks. Prime rate Is that ohurgod by large b*nks on short-term loans to business borrowers of the highest credit standing. 2/ Market yield; weekly avenges oompirted from dally cloning bll prices. Series of 3-5 year Issues nondstu of selected notes and boivli. 3/ Average of dally rates iiul.llahed by flm.-tue ooapanlee for directly placed paper for vnrylny maturities In the #0-179 dity ruivt«. ( , Note,~H)xhe and lows ure for Individual series.«,nd nay be on different da.tee for <K f ferent varies. Per spread*, high refers to widest, and low to nnrronest.' SHORT- AND INTERMEDIATE- TERM INTEREST RATES GOVERNMENT (PRIVATE MIL LOANS Exhibit F - Tables for Exhibit E Stock Market Stock price index 1 / Date 1957-59 - High Low i960 - High Low 60.51 39.78 59.50 53.32 November December Jan. 6 Jan. 1 3 Jan. 20 ft/ 5 5 . hi 56.83 58.48 59.60 59.96 (7/31/59) (12/27/57) (1/8) . (10/21) Trading Common stock volume 2 / yields 2 / (millions (per cent) of shares) Stock market customer credit Customers• Bank Total debit bal- loans to ances 4 / "others" 5 / (Mi]Llions of dollars) 3.07 4.66 3.18 3.62 4.3 1.4 4.1 2.2 4,764 3,554 4,406 4,132 3,401 2,482 3,222 3,004 1,373 1,060 1,184 1,111 3.51 3.41 3.32 3.26 3.24 3.1 3.7 3.6 4.4 4.1 4,294 4,406 3,141 3,222 n.a. n.a. n.a. 1,153 1,184 1,189 1,168 n.a. n.a. n.a. n.a.—Not available. g/ Preliminary. Standard and Poor's composite Index of 500 common stocks, weekly closing prices, 1941-43=10, Monthly data are averages of daily figures rather than of Fridays' only. Highs and lows are for Fridays' data only. 2/ Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prloes by Federal Reserve, Yields shown are for dates on which price index reached its high or low. Averages of daily trading volume on the New York Stock Exchange, Bid of month figures for member firms of the New York Stock Bcchange which carry margin aooounts) excludes balances secured by U. S. Government obligations, 5/ Wednesday figures for weekly reporting member banks. Bcoludes loans for purchasing or carrying U, S, Government securities. Prior to July 1, 1059, such loans are excluded only at banks in New York and Chicago. Weekly reporting basks account for about 70 per cent of loans to others. For further detail see Bulletin, y % Private Housing- Starts 1 / Date Unadjusted Seasonally adjusted Conventional Total annual rate Nonfarm I Total VA Nonfarm Total Nonfarm Total old series new series old series new series old series new series (Thousand of units) 20 57 96 83 Dec. l,U5l 1,330 16 87 1,216 55 1,366 75 Jan. 88 18 65 52 1,115 1,367 74 Feb. 68 22 63 90 1,112 1,125 Mar. 95 76 •91 124 25 109 1/325 Apr. 1,135 127 25 95 May 1,342 88 26 122 1,302 June 80 111 24 1,182 July 26 1 2 5 9 0 Aug. 68 22 1,066 97 Sept. 81 109 23 1,256 Oct. 68 20 1,212 E/ Nov. 8990 *48 14 £/ Deo. 1/ Total dtarts are Census estimates, which are not strictly comparable with old nonfarm series developed by BLS. 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 vhen 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 R M and VA starts are not strictly comparable In concept or timing; they Include both units financed by conventional mortgages and units without mortgages. ' 1959 i960 % 10- Exhibit G Long-term Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1961 January February March e/500 April May June July August September October November December 1st 2nd 3rd iith New capital Corporate 1/ State and local 2/ | I960 1961 | I960 1 1959 1 1959 577 715 86o 821 738 6U6 766 567 1,03k 739 623 582 639 858 6I4.6 89I1 785 887 731 550 1,033 932 593 1,006 727 962 738 535 7I4O 703 572 602 6# 567 516 E/965 879 86U 900 336 JD/1468 e/500 597 519 Ii55 2,20k 2,567 1,979 2,61*2 1,91*3 2,311 1,863 e/l,3Ck 2,113 2,531 1,5U8 1,571 .1,257 6,200 e/7,k2h 6,222 7,793 2/927 e/850 quarter quarter quarter quarter e/2,7h2 1st halfThree quartfe'if-s; Year 1|,519 6,915 a/9,687 2,151 2,367 2,k27 h,m 6,750 9,392 e/750 . h&5 h,6ih Excluding finance companies 3/ 1st 2nd 3rd Uth quarter quarter quarter quarter Year 1,722 2,150 2,017 e/2,3 bZ 1,999 2,412 1,716 2,503 e/8,231 8,630 |7 Estimated. Preliminary. 1/ Securities and Exchange Commission estimates of net proceeds. 2/ Investment Bahkfcrs Association of America estimates of principal amounts. 3/ Total new capital issues excluding offerings of sales and consumer finance companies. h.lh Exhibit H -11- Other Security Offerings 1/ (In millions of dollars) Long-•term Foreign government 2/ Federal arency 3/ I960 I960 1958 1 1959. 1 I1 1959 JanuaryFebruary March 01 60 2 196 53 3U 72 liO • 58 50 1*2 139 198 120 July August September 25 1 36 85 1 35, October November December 3k 33 30 70 58 123 547 99 2 April May June 2 175 70 2 Year — 9 5 17 7h 182 150 150 199 1958 1,163 251 175 — . 523 1U8 351 — . — 16U 199 — 160 149 fi/181 2/1,673 Short*-tferm State and local government h/ 98 150 — 220 — 8 6 707 Federal agency 3/ January February March 268 315 365 190 1*28 295 233 1*60 273 479 1*75 511 , 359 500 I4O9 371 208 1W, April May 365 351 297 563 111 2L5 357 3% 26J* 509 632 1*35 Ltt 6 675 289 209 161 329 July August September 280 505 199 21*6 1*67 399 289 li23 369 312 727 365 665 . 137 206 330 25k 2/J4I8 235 3k3 358 ?31 21a 2li3 177. 733 1*71 288 ill* 137 6,0/i7 3,096 October November December Year 1,179 1*15 3,910 1*68 296 282 c/It,817 . 2,321 1I5U £/ Preliminary. 1/ Data presented in this exhibit differ from those in Exhibit B in ttat refunding 1 stuns, an will as new capital lesues, ere Included. Long-term mourlties are defined as those ma,tuv5.ng in "«>ra thar. one year. 2/ Inoludos securities offered in tho United States by foreign govorrmento and their ru'odtvieions end by lnXernntlonnl organliatlona. "oureei Securities ami Bxohr.nge CCMmisitlor;. 3/ Issues not gunrent*ad by the U, S. Govtrn-isr.!-. Sotirosi long-t»ro, Securities and Rcohange Coanlnslonj short-term, Federal Reserve. 4/ Principally tax and bond anticipation not*s, warrants or certificates and Public Housing Authority not»». In some instances PHA rites inolud-td may have a somewhat longer ton thin one year. Source: Pond Buyer. \ -12- Large Long-term Public Security Issues for New Capital (Other than U. S. Treasury-) 1/ Proceeds of Large Issues Offered (In millions of dollars) Month Corporate 1959 - December i960 - January February March April May July August September October November December State and local government 230 279 2# 381 309 139 hh 2 303 581 266 566 465 260 , 217 #8 283 225 370 23k 561 191 298 367 U6 186 222 70 100 320 191 71 28 30 75 25 77 150 99 Large Individual Issues Offered January 1 through Issuer "type 3/ Amount I (millions L t u r i t y dollars)| CORPORATE 15.0 Texas Eastern Trans. Corp. Pfd. stk. Texas Eastern Trans. Corp. 1st mtg.p.l.bds.30.0 STATE AND LOCAL GOVERNMENT G.O. Fulton Co., Georgia G.O. Port of New Orleans, La. Los Angeles Sch. Dists., G.O. Calif 0 mia G.O. State of California G.O. State of Oregon G.O. \ State of New York G.O. Montgomery Co., Md. Contra Costa Co. Wtr. Dist. Rev. -Ut. California Penna. St. Pub. Bldg. Auth. Rev.-Rent. : None OTHER Other 2/ 20 Coupon rate or Offiring net inter- yield est cost 1981 5 5.00 Hating Baa t ,J; 1U.5 17.0 1962-87 1966-96/76 3.28 3.77 1.50-3.45 Aa 2.140-3.90 A >- 30.0 95.0 30.0 63.5 11.0 1961-85 1963-87/82 1976-78 1962-2011/01 1962-91 3.63 3.68 3.1*3 3.19 3.19 1.50-3.80 1.95-3.80 3.30-3.42 1.50-3.65 1.70-4.40 Aa Aa Aa ; 12.8 20.6 1963-96 1961-2000/70 3.98 3.85 2.10-4.20. Baa 1.50-4.00^V— A 1-2 -13- Footnotes 1/ Includes corporate and other security offerings of $15 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. J/ In the case of State and local government securities, G.O. denotes general obligationsy Rev.-Ut., revenue obligations secured only by income from public utilities; Rev0-Q.Ut., revenue bonds secured only by revenue from qua si-utilities 5 Rev.-S.T., revenue bonds secured by revenue from specific taxes only; Rev.-Rent., revenue bonds secured solely by lease payments. k/ 1 per cent securities of 1198-2000 not reoffered. -ill- Exhibit J 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 1959 - Dec. 31 Jan. 29 I960 Feb. 29 . Mar. 31 Apr. 29 May 31 June 30 July 29 Aug. 31 Sept. 30 Oct. 31 Nov. 30 Dec. 30 During month following date shown State and Corporate Other 2/ local govt. 210 ' 207 301 299 202 483 237 596 216 576 hbo 260 91 ' hhS 210 255 250 243 277 180 275 283 212 258 2h2 UL2 Subsequent to date shown State and Corporate Other 2/ local govt. 30 • 1*5 . 35 30 30 77 50 280 372 372 3Wi 357 553 155 • 1,006 731 836 585 335 1,036 5# 310 #5 280 258 502 380 30 . . 35 60 30 32k 283 336 391 560 682 127 50 Forthcoming Large Offerings, as of January 20 Amount T " " ~~ (millions APProx.1»t.e d a t e of dollars) l ° f ° l i e r l n e CORPORATE Lone Star Gas Co. Brunswick Corp. Montgomery Ward Credit Corp. Montgomery Ward Credit Corp. Consolidated Natural Gas Co. Southern Co. •aPuget Sound Pwr. & Light Co. •^American Machine & Foundry Co. American Telephone & Telegraph Co. Commerce Oil Refining Corp. Liberian Iron Ore, Ltd. Realty Collateral Corp. Com. stk. Conv. sub. deb. Deb. Sub. deb. Deb. Com. stk. Bds. Conv. deb. Com. stk. Deb., bds. & com. Bds. & stk. Coll. tr. notes Jan. 23 (rights expire) Jan. 25 25.6 I rights expire) Jan. 27 25.0 Jan. 27 25.0 Feb. 8 15.0 Feb. 11 30.0 Feb. 15 15.0 Mar. 16 ho.5 (rights expire) March e/800.0 (rights expire) Indefinite 1*5.0 Indefinite 30.0 Indefinite 20.0 26.2 STATE AND LOCAL GOVERNMENT New York City, New York State of Maryland State of Connecticut ^Milwaukee Co., Wise. G.O. G.O. Rev.-Ut. 7 6.5 20.3 29.0 10.3 Jan. Jan. Feb. teb. 2it 2h 1 3 J-2 . -15- Forthcoming Large Offerings, as of January 20 (Cont'd) Issuer Type Amount Approximate date (millions of offering of dollars) STATE AND LOCAL GOVERNMENT (Cont'd) Houston Ind. Sch. Dist., Texas State of North Carolina *State of Texas *St. Louis, Missouri Baltimore, Maryland Dallas, Texas Kentucky Turnpike Authority Los Angeles Dept. of Wtr. & Pwr., California Orleans Parish School Dist., La. Dade County, Florida New York State Housing Fin. Agency G.O. 0.0. G.O. G.O. G.O. G.O. Rev. Rev.-Ut. G.O. G.O. Rev. 11.0 10.0 12.5 15.8 47.0 19.0 38.0 Feb. 6 Feb. 8 Feb. 9 Feb. 15 Feb. 15 Feb. 20 Indefinite 12.0 10.0 1*6.0 100.0 Indefinite Indefinite Indefinite Indefinite OTHER *—Included in table for first time. e/ Estimated. 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: None. -Ids- Exhibit K Yields oh New and Outstanding Electric Power Bonds, Bated Aa and A 1/ Date 1952-1959 High Low 1 # 9 - July Aug. Sept, Oct. Nov. Dec. I960 . Jan. Feb. Mar. Apr. May 10 12 25 June 17 28 29 July 8 13 Sept. 15 23 28 Oct. < 21 Nov. U 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) 5.30 (12/8/59) 8? 2.93 (3/3I/5I1) -3 *4.93 lt.83 5.132/ *5.08 *5.30 ' 5.0 9 h.82 li.91 L88 31 23 5.07 17 36 *5.65 5.33 60 1*3 *5:3^ 51 28 k.9 7 5.1k 35 1*2 63 bS 25 37 32 5.10 ' 5.20 h.82 It. 81* 25 27 27 17 L95 26 33 11 lt.93 It. 88 It. 80 11 8 I1.88 26 5.05 U3 21* 2k 22 16 33 W 17 18 Dec. 7 1961 - Jan.. 1? 13 5.65 (9/18/59) 123 3.00 (3/17/5U) -15 5.00 k9 •—Single observation, not an average. 3/ Covers only 30-year first mortgage bonds, as reported in Mooch's Bond Survey. Except where indicated, the actual yield figure and the amount above seasoned yields are averages of offerings during the indicated period end of the differences between theca now- offering yields and yields on seasoned issues of similar quality for the came day. Average saturity for the seasoned issues varies fro* 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. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -17° January 23, 1961 Part II •=• Canada Interest rates had a slight rising tendency in Canada during the week under pressure of new security offerings and securities sales by the Bank of Canada . A $100 million issue of new 3-year Government of Canada bonds was oversubscribed, and more offerings are expected in the hear futureo Some foreign interest was reported in the new issue. Canadian short Treasury bills continued to exceed the U.S. bill yield by almost 1 per cent per annum, but on a covered basis the incentive to hold the Canadian bill declined as a result of a widening of the discount on the forward Canadian dollar. Stock prices rose to the highest levels in over a year. The Canadian dollar showed little change and closed last Thursday at about 100,7 (U.S. cents). Money market. The average yield on the Canadian 3-month Treasury bill at last Thursday's auction rose k basis points from 3,18 per cent on January 12 to 3=22 per cent on January 19 (see Table), The average yield on the 6-month bill also rose slightly from 3,1*8 per cent on January 12 to 3°53 per cent, last week. The Bpnk of Canada sold $lU million pf bills last week, while the chartered -banks purchased $10 million and the general public purchased $3 million. The average closing rate on day-to-day loans showed no change from the previous week at 2.80 per cent per annum. The spread favoring the Canadian over the United States short Treasury bill widened just slightly to 0,95 per cent per annum during the week-(see Table), A wider discount on the forward Canadian dollar reduced £he net incentive to hold the Canadian bill on a covered basis from 0.66 per cent per annum to 0,H5 per cent last week (see Table). Bond market. There was only a slight upward drift in yields on Canadian bonds last week. The spread between selected comparable Canadian and United States securities (Thursday yields for bills and Wednesday yields for bonds) were as follows (figures in parentheses refer to the previous week): 0,95 1.06 0.78 1.29 1,f?0 per per per per per cent cent cent cent cent on on on on on a 91-day bill (0,91) a 182-day bill (0,98) an 80-year bond (0,82) a 30-year bond (1,29) a 35-year bond (l,f>0) The Bank of Canada reduced its holding of bonds by $2$ million and the chartered banks sold $17 million, while the Government accounts purchased $23 million and the general public purchased $17 million (see Table). On January 18, the Minister of Finance accounted a new $100 million, 3-year Canadian bond issue as the first step in financing the $525 million issue which will mature May 1, 1961, The new issue was oversubscribed with strong foreign demand, especially from Europe, The offering was for noncallable k per cent bonds, at 98,50, to yield U,50 per cent to -18= maturity on May 1, I96I4.0 Another $50 million of this issue will be taken by the Bank of Canada in exchange for an equal amount of the May 1, 1961 maturity. The Minister of Finance announced that, as a result of the successful savings bond drive, the Government has sufficient funds to permit it to retire the remaining $325 million of the maturing issue and follow in an orderly fashion with new bond offerings in the coming months. Ontario Hydro offered $50 million of bonds last week with a choice of two maturities as follows: (l) 20-year, 5-1/2 per cent bonds, at 97 yielding 5«75 per cent; (2) 10-year, 5-l/U per cent bonds, at 99, to yield 5.375 per cent. While the price of the new issue was not considered very generous, demand was reported heavy. Demand from U.S. investors, however, was reported to be light. A $15 million, 20-year bond issue by Irving Oil Co. is expected soon, to be priced at a discount with a 6 per cent coupon. Alberta Trunk line is now reassessing its plans for a $50 million mortgage bond placement in the U.S., since the yield would have to be higher now because of the recent increase in the withholding tax. Consumer credit. In recent years consumer debt has been increasing faster than disposable income. At the end of September I960 consumer debt was Hi.3 per cent of disposable income compared with liul per cent in 1959 and as little as 8.9 per cent in 1952 (see Table)e There has also been a tendency in the last two years for longer repayment periods to be offered in the financing of nondurable consumer purchases (see Table), but the periods remain shorter than the average for the United States. Foreign exchange. There was little fluctuation in the rate on the Canadian dollar during the week with the spot rate closing at 100»66 (U.S. cents) last Thursday compared with 100.63 (U.S. cents) the week before. There was some upward pressure on the rate early Wendesday when the Government offered a new $100 million bond issue; the rate rose to 100.8 (U.S. cents) but eased to 100,7 (U.S. cents) later in the day. There was some widening of the discount on the 3-month forward Canadian dollar as the spread of the Canadian over the U.S. bill yields continued close to 1 per cent for the 3-month bill. Stock market. Industrial stock prices on the Canadian exchanges continued to rise through the week, with the Toronto index exceeding the high of early I960. The following table compares industrial stock prices in Toronto, Montreal, and New York's Standard and Poor: -19Toronto Montreal - High Low 532.26 U72.38 320.0 250.3 - Jan, 6 9 10 11 12 13 16 529.69 532.06 533.00 532.68 532.39 53k,25 536.13 282.0 283.2 285.6 286.8 286.9 . 290.2 289.6 New York Standard & Poor • 65.00 55.98 61.86 61.19 62.58 62.76 63.07 63.07 The volume of stock sold on Canadian exchanges rose sharply during the week ending January 13, to $lli,656 million compared with $9,8# million the week before. British Commonwealth Section Division of International Finance Board of Governors of the Federal Reserve System -20- Selected Canadian Honey Market and. Related Data 3-mo. Treas. bills Spread Canada u . s j / over U.S. 1960 - High Low 6.16 3.25 5,lU 1.68 kM9 2.80 a. 63 2.10 2.96 0.30 1.62 -0.82 Dec. 29 Jan. 5 12 19 3.25^"" 2 , 1 7 2.27 3,3^ 3.18 2.27 2.27 3.22 1.08 1.07 0.91 0.95 1959 - High Canadian dollar 3-mo. discount (-1 Spot forward premium (+)<y 105-51 102.58 105.27 100.33 - 100.33 100.hi 100,63 100.66 100.22 100.36 100.56 100.53 Net incentive to hold Can. bill®/ 0.99 -0.91 1.99 -0.57 -0.U3 -O.UU -0.25 -0.50 0.65 0.63 0.66 o.U5 a/ Average yield at weekly tender on Thursday. 2/ Conposite market yield for the U.S. Treasury bill on Thursday close of business, c/ In U.S. cents. cf/ Spread between spot rate and 3-month forward Canadian dollar on Thursday closing, expressed as per cent per aanum. e/ Spread over U.S. Treasury bill (column 3)» plus 3-month forward discount or premium (column 6)* Selected Government of Canada Security Yields 6-moe Treas.bills Spread Canada 1959 - H i g h 1960 - H i g h Low 6.2U 5.11 5.33 1.99 D e c . 29 Jan. 5 12 19 3.5k 3.63 3-U8 3.53 J c/ <y e/ z/ g/ n/ Long-term bonds (35 year) (20 year) Spread Spread Canada Canada Intermediate bonds (8 yr.) Spread over Canada U.S.d/ 1.37 -0.86 5.27 50 5.55 U.09 1.11 0.21 1.17 1.15 0.98 1.06 U°7U . b.70; U.68 U.73 1.00 0.99 0.82 0.78 a. Mk Mk . 5.30 U.UU 5.U2 U.63 5.19 5.19 5.17 5.20 1.36 0.85 5.05 U.73 5.28 U.68 1.61 0.95 1.37 1.37 1.29 1.29 5.23 5.23 5.20 . 5.20 1.57 1.59 1.50 1.U7 Average yield at weekly tender on Thursday. Spread between Canadian auction rate and composite market yield of U.S. on close of business Thursday. Government of Canada 2-3/U per cent of June 1967-68. Spread over U.S. Government 2-1/2 per cent of 1963-68. Government of Canada 3-lA per cent of October 1979. Spread over U.S. Government 3-l/U per cent of 1978-83* Government of Canada 3-3A per cent of September 1996 - March 1998. Spread over U.S. Government of 1995. -21= Canada: Changes in Distribution of Holdings of Canadian Government Direct and Guaranteed Securities (millions of Canadian dollars, par value) Bank of Canada Treas. Bonds bills Novo 17 2h Dec. 1 8 15 22 29 Jan. 5 12 19 Source* + 10 - 3 + 3 - 3 + 1 - 9 0 - 2 - 12 - 25 + 3 + 1 + 10 + 9 - 2 - 5 + - Government Total 3 2 9 - Ik + 1 8 + 2h h - - 6 -103 + 2 - 11 + 16 + 25 Chartered banks Treas. Bonds bills + + + + + + + + - 28 30 21 7 13 18 6 18 39 10 General public Savings Treas. bonds bills Bonds 6 3 8 28 5 23 Hi 12 2 17 +151 +271 + u - h - 13 - 11 - 8 - h + 16 - 7 Bank of Canada, Weekly Financial Statistics• Consumer Debt as Per cent of Disposable Income ~~ (in per cent) ~ "" I960 1959 1958 1957 1956 llu3 lU.l 13el 12„7 13,0 1955 195U 1953 1952 12 . h ' 11.2 10.5 8.9 Average Repayment Terms in Months New cars Used cars Other consumer goods Other commercial and industrial goods Source: The Financial Post. 19*8 I960 2Ud 17.0 20.1 26.8 17.6 -2U.5 25.1 28.3 + + + + + - 26 29 3 1 19 ll - 15 - 2-U + 3 + + - 17 5 27 31 U 62 - 2k + 10 - 11 + 17