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(CONFIDENTIAL FR) April 13, 1973 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM CONFIDENTIAL (FR) April 13, 1973 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Both RPD and M 1 appear to be growing at annual rates below the low ends of the Committee's March-April ranges of tolerance, as shown in the table. Expansion in M2 also seems to be on the slow side, at the low end of the range specified four weeks ago. Growth in the bank credit proxy--at a 17 per cent annual rate for the March-April period--appears to be somewhat faster than expected at the time of the last Committee meeting. Growth of Monetary Aggregates and RPD in March - April period (SAAR in Per Cent) Ranges of Tolerance Current Estimates RPD 12--16 9-1/2 M1 4--7 2-1/2 M2 5--8 5 MEMO: Federal funds rate * 6-3/4--7-1/2 Weeks Ending 7.18 4/4 4/11 6.84 Raised to 7 per cent on April 11. (2) The shortfalls in RPD and the money supply aggregates relative to earlier expectations are attributable almost entirely to slower than anticipated growth in private demand deposits. The reasons for this are -2obscure as usual, but one factor may be that processing of Treasury refund checks has been slower than we had anticipated, thus keeping Treasury tax and loan balances higher and private demand balances lower than projected. Also, the steepness of the rise in short-term interest rates since late last year may be producing a dampening effect on money demands with a somewhat shorter time lag than usual. In addition, the dramatic first quarter upsurge in consumer spending and the accompanying sharp advances in retail prices might have caused households to draw down money balances below normal levels. (3) Early in the inter-meeting period, RPD and the money supply aggregates all appeared to be growing at rates within the Committee's March-April ranges of tolerance. While the Desk in this period continued to follow a reserve strategy expected to produce a Federal funds rate averaging around 7 per cent, unexpected shortfalls in reserve availability from other reserve factors produced an average funds rate closer to 7-1/8 per cent. When it became clear, in late March, that RPD and M1 were running below their desired growth ranges and that M2 was at the bottom of its range, the Desk adopted a reserve strategy expected to be consistent with a Federal funds rate averaging around 7 per cent, but with doubts resolved on the side of less tautness. By the statement week of April 11, the average Federal funds rate had dropped to 6.84 per cent. Late on Wednesday, April 11, a majority of Committee members concurred in the Chairman's recommendation that the low end of the range of tolerance for the funds rate be raised from 6-3/4 to 7 per cent for the remaining part of the intermeeting period, and the Desk has since sought to keep reserve availability correspondingly firm. -3(4) Other short-term interest rates continued under general upward pressure during the early weeks of the intermeeting period, but after early April this trend was reversed, as the market came to expect an early announcement of a stronger controls program and the view developed that no further near-term tightening (and possibly some easing) of monetary policy was likely. term rates showed mixed changes. Over the full intermeeting period, shortYields on both Treasury bills and Federal agency issues with 6-month to 1-year maturities are down significantly on balance. around 6.20 The 3-month Treasury bill--presently at per cent--has shown little net change since the last meeting, although it did at one point reach an intermeeting high of around 6-1/2 per cent. by 25 -- Rates on large CD's and commercial paper increased on balance 35 basis points, reflecting the pressure of continued rapid net issuance of CD's by large banks. (5) Yields on longer-term securities showed little response to the further rise of short-term rates early in the intermeeting period and have generally experienced net declines over the period as a whole. This relative strength was attributable partly to the rather moderate volume of new longer-term debt offerings. In addition, following the early April shift in market expectations, professionals moved to reduce their short positions. hand, Rates in secondary mortgage markets, on the other continued to edge higher over the period, and there were field reports of some upward pressure on new mortgage commitment rates as well. (6) The table on the following page shows (in percentage annual rates of change) selected monetary and financial flows over various time periods. -4Past 3 Calendar Yearr Dec. '72 over Dec. Past 12 Months Mar. '73 Past 6 Past Months Mar. '73 3 Months Mar. '73 Past Month Mar. '73 Sept '72 Dec. Feb. over '69 Mar..'72 '72 '73 Total reserves 8.4 9.9 11.2 8.8 Nonborrowed reserves 8.8 2.6 -0.9 -7.2 Reserves available to support private nonbank deposits 9.0 9.5 10.2 10.4 13.0 7.5 6.4 5.4 2.0 0.5 11.3 9.0 8.1 5.9 5.4 12.8 11.2 10.1 8.5 6.6 Total member bank deposits (bank credit proxy adj.) 10.7 12.7 13.8 15.2 20.3 Loans and investments of commercial banks 2/ 12.4 15.2 17.7 20.3 19.4 .9 1.8 2.5 3.9 6.1 13.1 -10.7 Concepts of Money M 1 (currency plus demand deposits)1/ M 2 (MI plus time deposits at commercial banks other than large CD's) M 3 (M2 plus deposits at thrift institu- tions) Bank Credit Short-term market paper (Monthly ave, change in billions) Large CD's Nonbank commercial paper -- 1/ Other than interbank and U.S. 7/ Based on month-end figures. -- .1 - 9 -1.3 -Government. Includes loans ~old to affiliates and branches. NOTE: All items are based on averages of daily figures, except for data on total instituloans and investments of commercial banks, commercial paper, and thrift tions--which are either end-of-month or last-Wednesday-of-month figures. Prospective developments (7) Longer-run targets and associated April-May ranges for key variables are shown below in summary form for Committee consideration (with figures for aggregates representing seasonally adjusted annual rates of change). Of the alternatives shown, alternative B--which is indexed by a long-run growth rate of 5-1/4 per cent for M --represents 1 essentially a continuation of longer-run monetary targets adopted by the Committee at its last meeting (stipulated at the time as 5--5-1/2 per cent for M1). Alternative A represents an easing of policy, and alternative C a tightening. Alt. A Alt. B Alt. C Longer-run targets (represented by growth rates for 2nd and 3rd quarters of 1973) M1 6-1/2 5-1/4 4 M2 6-1/2 5-1/4 4 11 10 9 10-1/2 8-3/4 7 21--23 13--15 RPD 11--13 10--12 M 4-1/2--6-1/2 4--6 3-1/2--5-1/2 5--7 4-1/2--6-1/2 3-1/2--5-1/2 5-3/4--7 6-1/2--7-1/2 6-3/4--8 Credit Proxy RPD Associated ranges for April-May Nonborrowed RPD 7-1/2--9-1/2 9--11 1 M2 Federal funds rate -5aAlternative Longer-Run Targets for Key Monetary Aggregates M1 Alt. C Alt. A Alt. B Mar. Apr. May June Alt. B 256.8 257.7 259.0 260.2 256.8 257.7 258.8 259.6 532.9 534.9 538.3 541.7 Sept. 265.3 263.6 261.9 550.5 1973 Alt. A 256.8 257.7 259.2 260.8 Quarters: Q. Q. 6.0 7.0 5.3 5.2 4.0 7.0 1973 2nd. 3rd. 4.0 6.0 6.5 6.5 -Adjusted Credit Proxy 532.9 534.9 537.7 540.3 Alt. C 532.9 534.8 537.0 538.7 Alt. A 421.8 Alt. B 421.8 Alt. C 421.8 426.6 429.7 434.5 426.6 429.3 433.4 426.5 428.8 432.3 547.2 543.1 445.4 443.2 440.7 Rates of Growth 4.5 5.5 3.5 5.0 12.0 10.0 11.0 9.0 10.0 8.0 4.5 5.0 13.5 8.5 13.5 7.5 13.5 Months: Apr. May 4.0 5.0 4.5 7.5 4.5 6.5 Ttal Reserves Alt. A Alt. C Alt. A Mar. Apr. May June 31,995 32,254 32,683 32,385 31,995 32,238 32,642 32,291 31,995 32,221 32,594 32,189 29,614 29,788 30,208 30,374 Sept. 32,952 32,695 32,427 5.0 7.0 3.5 5.0 2.5 3.0 31,162 Rates of Growth 10.5 10.5 9.5 16.0 9.0 15.0 8.5 14.6 1973 Alt. B Quarters: 1973 2nd. Q. 3rd. Q. Months: Apr. May 7.0 17.0 RPD Alt. B 29,614 29,772 30,167 30,281 Alt. C 29,614 29,756 30,118 30,182 30,907 30,638 8.5 7.5 6.0 6.5 16.6 6.0 14.5 9.0 6.5 (8) The staff expects that the alternative B path for the aggregates would be achieved with little change from recently prevailing money market conditions. Given such conditions--centering on a Federal funds rate of 7 per cent--growth in M1 is expected to be somewhat greater than it has been on balance over the first three months of the year. In April-May, a growth rate of 4--6 per cent for M1 is indicated. During that period, income tax refunds are likely to add somewhat to private demand balances. In addition, continued strong expansion in economic activity will likely lead to a reassertion of the underlying growth trend in transactions demands for cash. experience, the sharp drop in that developed in (9) the first On the basis of historical demand for money relative to GNP growth quarter seems very unlikely to persist. With a Federal funds rate around 7 per cent, interest rates generally are expected to show only minor changes on balance over the next month. However, the recent stability in rates has been based in part on expectations that a stiffer controls program is in the offing. If this comes to seem less likely, upward rate adjustments might well take place. Apart from attitudinal shifts, however, basic supply-demand conditions do not suggest significant further upward pressure on rates in the near-term. The Treasury will be announcing a refunding of $4.3 billion of publicly-held issues on Wednesday, April 25. But this refunding will be in a quarter when the Treasury will be repaying about $5 billion of debt on balance. Some attrition in this refunding and the maturity of $2 billion of mid-April tax bills could keep Treasury bill cantly from current levels. rates from rising signifi- -7(10) It is not clear, though, that long-term interest rates have yet fully adjusted to earlier advances in short-term rates. Mortgage interest rates seem likely to rise further in view of our projection that savings inflows will continue to moderate, given the current level of short-term market rates and assuming no rise in Q ceilings. The development of a dual prime loan rate is likely over time to push some bank borrowers back into the open market, with consequent upward pressure on the commercial paper market and, on corporate bond rates. Upward yield pressures in to a lesser extent, bond markets are likely to be limited by the basically light calendar of corporate bond offerings scheduled thus far, although increased Federal agency issues and possible debt lengthening by the Treasury could be adding to the supply of longer-maturity debt. (11) The sensitivity of the current market is such that a drop in the funds rate to the 6-1/2 per cent lower end of the alternative B range is likely to be accompanied by a drop in the 3-month Treasury bill rate to under 6 per cent and an accompanying decline in long-term rates. On the other hand, a rise in the funds rate to the 7-1/2 per cent top of the range would exert upward pressure on the whole interest rate structure, including the discount rate. (12) Bank credit growth in April-May, though expected to slow from the exceptional pace of recent months, still is likely to be fairly substantial by historical standards, reflecting continued strength in business and consumer demands for bank credit. Given roughly the pre- vailing structure of short-term market rates, growth in time deposits -8other than large CD's probably will be quite moderate--at around a 6 per cent annual rate in April-May. Banks are expected to con- tinue adding substantially to CD's outstanding, although the rate of growth should decrease somewhat as businesses shift more of their borrowing to the open narket. (13) in Under alternative A, the staff would expect a decline the Federal funds rate to accompany an effort to encourage more rapid growth in the aggregates, and vice-versa for alternative C. However, even-keel may constrain the Committee's willingness to adopt reserve objectives that lead to changes in money narket conditions of the dimensions of alternatives A and C. If the Committee were to choose alternative A or C, but limit the downward or upward movement of the funds rate to smaller dimensions than indicated, it would, of course, extend the period needed to achieve the aggregate objectives of either alternative. Proposed directive (14) Presented below are three alternative formulations for the operational paragraph of the directive, which might be taken to correspond to the similarly lettered policy alternatives discussed in the preceding section. For all three alternatives it is proposed to add a reference to Treasury financing because of the regular May refinancing to be announced late this month, and to delete the reference to international developments because only a moderate reflow into dollars has developed in recent weeks and exchange markets have been relatively quiet. Also, for the sake of clarity, it is proposed to describe the conditions sought as those "consistent with" rather than those "that will support" the aggregate objectives described. Retention of the reference to credit market developments is proposed only for alternative C, the one alternative that contemplates a significant tightening of the money market. Alternative A possible To implement this policy, while taking account of [DEL: domestic developments] international and market credit FORTHCOMING TREASURY FINANCING, the Committee seeks to achieve bank reserve slower] somewhat] FASTER[DEL: and money market conditions CONSISTANT WITH[DEL: occurred than growth in monetary aggregates over the months ahead [DEL: months. 6 past the in growth on -10- Alternative B To implement this policy, while taking account of developinternational and market credit domestic possible [DEL: ments] FORTHCOMING TREASURY FINANCING, the Committee seeks to achieve bank reserve and money market conditions CONSISTENT WITH [DEL: slower] somewhat support will that MODERATE growth in monetary aggregates over the months ahead [DEL: than months]. 6 past the in average on occurred Alternative C To implement this policy, while taking account of domestic] credit FORTHCOMING TREASURY FINANCING AND possible [DEL: market [DEL: international] and developments, the Committee seeks to achieve bank reserve and money market conditions CONSISTENT slower] somewhat support will that WITH MODEST [DEL: growth in on occurred than monetary aggregates over the months ahead [DEL: months]. 6 past the in average CHART 1 (FR) STRICTLY CONFIDENTIA 4/13/73 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS I-r J F M 1973 M 1971 J 1972 S D M J 1973 *Break in Series, Actual Level of RPD After Reduction in Reserve Requirements Effective November 9 1972 A M (FR) CONFIDENTIAL STRICTLY CHART 2 4/13/73 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS 7% growth for Mar -Apr i0 4% growth 14/11/73) -250 BROADER MONEY SUPPLY M2 -5: - 480 -1460 1971 1972 1973 I I I N D 1972 J, F 1 M A 1973 -5 I M b" CHART 3 STRICTLY CONFIDENTIAL (FR) 4/13/73 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS / 420 -1400 I 1 *rBak I !I 1971 iI i I i I i 1972 i I I 1973 l I I N D J 1972 1 J I I I F M A 1973 in serses Actual Levei ol Totai Reserves After Reduction in Reserve Re~uirements Effective November 9, 1972 CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES wF~I( y AVI PFR CENT r INTEREST RATES Long-term INTEREST RATES Short-term MONEY MARKET CONDITIONS wi -7 - 9 1 PER CENT wrf KLY PFR CENT KY Avi RAFs tl - 9 MORTGAGES VFHA FNMA MONDAY AUCTION J~ FEDERAL FUNDS R A TE R A TE-1 5 7 Aaa UT ILITY 7 \NEW ISSUF EURO DOLLARS 3 MONTH FR DISCOUNT RATE - 5 -3 3 GOVERNMENT BONDS BILIONS OF DOLLARS I WFDNESPAY / f /_j RESERVES 5 MUNICIPAL Aaa 10 YEAR AVERAGES 2 TREASURY BILLS 3 MONTH + 0-31 SI I I I I 1972 PRIME COMMERCIAL PAPER 46 MON1H NET BORROWFD 1971 3 I I I 1973 1971 1972 I I I 1973 I I I 1971 I II I II I 1972 II I I l .. l . lI 1973 STRICTLY CONFIDENTIAL TABLE 1 APRIL 13, 1973 BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) ------ -------------------- I I I ---------------- ---- ft -- ------------------------- -------------------------- ------------------------REQUIRED RESERVES I AGGREGATE RESERVES II -----------.-.--------I ---------------------RESERVES AVAILABLE FOR II SEASONALLY ADJUSTED PRIVATE NONBANK DEPOSITS ------------------ II------------------------------------------I------ .---... -----------....II I SEAS ADJ I NON SEAS ADJ II PERIOD TOTAL RESERVES NONBORROWED RESERVES ----,------------------------- ft ---------------------(1) I (2) S 29,211 I 29,411 29,296 29,614 (299772) 30,384 29,369 299351 S (29.805) ANNUAL RATES OF CHANGE QUARTERLY I 1973-IST OTR. 2ND QTR I I MONTHLY 1 II (3) II II II (4) II II II SII II II 31.309 329242 31.649 319995 (32,238) 1 30.063 1 I 10.4 9.0) I I 29591 I II II fI 309848 299787 299522 (30,104) ( 8.8 3.5) ( II II II II II II II 7.7 I 22.8 -4.7 I I 13.0 6.5) APR. I OOV#T AND INTERBANK (7) (8) 79561 2,178 2,47 7,646 79674 7,707 (7,760) 2,253 2,384 2,669 (2,965) 2,832 2,353 2,381 ( 2466) 13.1 11.4 9.5) I 19.248 19.031 199020 (18.852) 27.4 23.1 ( 7.7 4.0) 90.2 ( 90.0) 7.8 51.7 I I -10.9 12.5 35.8 -22.1 13.1 I 9.0) 9.2 23.2 -13.5 -0.7 ( *10.5) 31,3 .41.3 .10.7 ( 23.5) ( 11.0) (133.0) 6.5) (146.0) 19,230 199293 199482 199084 19(139 79592 7.628 79672 7,634 7*674 2,234 2.2b6 2,240 2,267 2,259 20592 2,6b7 3.330 2.833 2,610 199046 186957 199143 18979 7,670 79688 7,646 79692 2,288 2,338 2,442 29457 2,274 2.241 19243 18,953 199033 189857 7,686 7,693 7,722 7,713 2,524 2,603 2,671 2,799 2,455 20422 2.331 199008 18,790 7,741 7,771 2,859 2,910 2.518 ( ( 6.5) 41.3 60.8 13.5 4.4 5.2 8.5) I II MAR.-APR ------------ (6) 18,883 -7,2 16,5) II 1973--JAN. FEB. MAR. (5) -0.8 4.8 3.6 14.2 3II I 1972--DEC. CODS AND NON DEP t----------------------------- II 9.9 10.6 1972--3RD OTR. 4TH QTR. OTHER TIME OEP I 28,862 I I PRIVATE DEMAND II II MONTHLY LEVELS-SMILLIONSI 1972--DEC. 1973--JAN. FEB MAR APR. I I -5.5) 14'3.5 WEEKLY LEVELS-SMILLIONS --------------------- 1973--JAN. FEB. It 3 10 17 24 31 I 7 14 21 28 29,367 299241 29,915 28*958 29,548 I I I 30292 30,034 31,044 30,105 30*394 I 299167 29*111 S S 29,671 299235 29,591 29,314 29965 28917 I MAR. APR. 7 14 21 28 I f 1 29,850 2996 299676 29,428 309093 299400 4 11 I ---------------------------- I I f I I I 9.407 8699 29503 29,293 29,937 29.170 319959 319898 12965 II 339245 II II 319791 II II II 32*158 I! 319608 II 319560 I 319945 I 31.476 II II II 32*305 II 317118 II 32.006 II 319687 II II 32.610 II 319864 I II ----------------- 6----- ~r----- 298e86 31.007 31.720 30537 30.576 I I 309284 299511 299767 299530 309238 290148 28E679 299338 309560 299350 1 I I I I I 2.259 2.464 I --------------------------- NOTEs DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. 1/ AT THE FOMC MEETING MARCH 209 1973 THE COMMITTEE AGREED ON A RPO RANGE OF ------------------------------------ 2.478 12 TO 16 PER CENT. ------------------------------------------------------------------------ STRICTLY CONFIDENTIAL TABLE 2 APRIL 13, MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY I I I PERIOD MONEY SUPPLY NARROW I BROAD (MI) I (M2) (1) I MONTHLY LEVELS-SRILLIONS --------------------I 1972--DEC. 1973--JAN. FEB. MAR. APR. I I (2) 1 ADJUSTED CREDIT PROXY (3) 1 I II U.S. II GOVT. (f DEPOSITS I I I 11 1 (4) I 255.5 MONTHLY 255.4 256.7 256.8 (257.7) I 527.9 530.5 532.9 (534.9) 409.2 414.8 421.8 (426.6) II S II II I I I I I 6.5 I 8.2 8.6 I 2.0 ( 5. ) 103 10.2 I I I I 13.3 WEEKLY LEVELS-SBILLIONS I --------------------- I I 1973--JAN. 3 10 I 17 24 31 MAR. APR. 7 14 21 28 7 14 21 28 P 15.2 (11.0) 1 I 1 4 P 11 PEI I I 12.2 I -05 6.1 0.5 ( 4.0) I MAR.-APR. I FEB. I 5.9 ( 5.5) I I 269.6 I 316.9 322.6 330.9 (336.2) I I I 272.5 273.8 276.0 (277.2) 43.2 14.0 14.4 I 23.1 (17.0) I 1 4.4 I 44.4 488 54.9 (59.0) I I I I I 1 I I II II I II I I 1 4.5 4.5 4.9 ( 5.0) I I 12.3 11.6 I I 9.5 6.0) I I II 1 1973--JAN. FEB. MAR. APR. I I II 9.8 12.1 I I 312.8 I I I I ( (I ) (7) I I T.1 7.2 7.5 ( 5.6) II I I I NONOEPObIT I SOURCES OF I FUNDb I 4 06.4 I I I 1972--EC. (6) I IIt 525.1 I 1973--1ST OTR. 2ND OTR. (5) I II II 1972--3RD QTR. 4TH QTR. TIME AND SAVINGS DEPOSITS I I OTHER TOTAL I THAN CD S I CD S I I PERCENT ANNUAL GROWTH --------------------QUARTERLY I I I ADJUSTED) I 6.4 5.9 5.4 ( 4.5) 258.2 254.6 255.7 255.0 254.3 256.3 256.4 258.3 255.9 I 257.6 256.1 257.5 256.1 I 257.5 255.2 I I ( 5.0) I 1 I I I I I I 1 530.2 526.2 528.5 527.8 527.7 529.0 530.4 532.3 530.3 I 534.1 531.9 I I 1 1 I I I tI I I I I If I II I II 1 I I II (17.0) 1 II I II II 17.1 15.7 21.6 30.9 (19.0) I II 11.2 I I I I I I 12.9 5.7 9.6 ( 5.0) I I 11 8.6 7.2 6.8 6.9 6.7 411.3 413.0 417.5 417.2 II II II II 5.5 6.9 8.6 7.9 418.8 419.9 4 23,2 423.6 II 11 II II 7.0 6.3 8.1 8.2 426.0 422.7 II II It 7.7 56 412.0 407.4 409.4 409.1 409.8 1 533.0 531.7 533.7 51 32.9 I I 8,3 16.4 20.3 (13.5) I I ( 2.5) II 13.4 I f I I I I I 1 I I I I I I I I (25.5) 315.5 315.6 316.7 317.3 318.9 320.1 322.2 323.2 325*0 327.5 330.1 331.4 333.2 334.3 335.1 1 I I 1 I 1 I I I I I I 1 I ( 7.5) 272.0 271.6 272.8 272.7 273.4 272.8 274.0 274.1 274.4 275.3 275.6 27602 276.9 276.6 276,7 I I I I I 1 I I I I I I 43.5 44.0 43.9 44.5 45.5 47.3 48.2 49.1 50.7 52.2 54.5 55.2 56.3 57.8 58.4 I I I 1 1 1 1 I I I I 4.4 4.1 4.6 4.7 4.7 4.5 4.4 4.4 4.7 4.8 5.0 4.9 5.0 4.9 4.8 P - PRELIMINARY PE - PARTIALLY ESTIMATED ANNUAL RATES OF CHANGE OTHER THAN THOSE FOR THE PAST ARE ROUNDED TO THE NEAREST HALF PERCENT. NOTEO DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. ------------------------------ r---------------------------------------....... 1973 STRICTLY CONFIDENTIAL (FR) APRIL 13, 1973 Table 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Daily Average a Open Market Operations Bank (6) Reserve Effect 2/ 1 Other 4/ Member Borrowing Factors (7) (8) in reserve categories available res.5/ req. res. against U.S.G and interb. (6)+(7)+(8)-(9) (9) (10) Target available reserves 5/ (11) Bills & Accept. (1) Open Market Operations 1/ RP's Agency Coupon Issues Issues Net Total (4) (5) (2) (3) 1972 -- Oct. Nov. Dec. ll -548 450 116 -51 -135 -22 157 134 --147 205 -442 596 1,124 -226 - 25 59 32 443 -378 -1,835 -839 493 -651 - 78 312 1,378 -343 335 -1,520 -300 1973 -- Jan. Feb. Mar. Apr. May. 1,336 659 1,109 196 -- --18 -14 862 -193 542 2,197 644 1,636 1,116 146 1,689 117 428 266 376 -1,794 -1,718 278 -109 160 1,331 -1,111 77 995 -1,140 -40 505 -2,493 -3,055 -1,020 -77 375 81 -804 2,274 -1,034 2,270 -454 110 647 759 -319 -890 - 99 256 -114 -277 343 1,059 1,883 -62 -190 -504 -16 -740 -1,856 -2,015 781 206 -215 282 490 1,827 2,259 293 -197 -599 -48 -455 --- -1,686 2,112 -1,245 2,159 37 p 4 15 p 648 -126p -617 -331p --8 -1,212 -379 -769 -144 998p -572p -258p -255p Period 3 Monthly Weekly - - 7 -561 14 21 -4 383 -196 - 28 1973 -- Feb. 842 -- -18 - -159 446 -- 21 28 Apr. 7 14 Mar. 441 47 - 4 11 18 25 443 243 -- - -14 6 2 03p 10p -144 - 93p 2 98p -4 9 p 551 -210p 645p -768p 1/ Represents change in System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill auctions. 2/ Represents change in daily average level from preceding period. 3/ Includes matched sale-purchase transactions as well as RP's. 4/ Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, and other FR accounts. 5/ Reserves to support private nonbank deposits. Target change for March and April reflects the target adopted at the March 20, 1973 FOMC meeting. Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted during the month. STRICTLY CONFIDENTIAL (FR) APRIL 13, 1973 Table 4 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of Dollars U.S. Govt. Security Dealer Positions _Dealer Bills Coupon Issues Period Other Security Positions Corporate Municipal Bonds Bonds (1) (2) (3) Excess Reserves (4) (5) Member Bank Reserves Positions s Member Bak R Borrowings Net Free Basic Reserve Deficit Reserves 8 New York 38 Other at FRB (6) (7) (8) (9) 1972 -- High Low 4,291 1,916 1,585 -93 235 0 383 40 796 -133 1,223 12 380 -1,070 -5,635 -1,638 -5,270 -1,910 1973 -- High Low 3,718 1,683 1,125 -96 175 0 244 70 560 -78 2,139 688 -562 -1,943 -5,243 -3,567 -7,165 -4,839 1972 -- Mar. 3,489 604 101 185 249 99 150 -3,208 -3,522 Apr. May June 2,612 2,792 2,694 274 675 205 46 123 87 99 134 260 136 104 204 109 119 94 27 -15 110 -3,026 -2,625 -2,828 -3,299 -2,652 -2,864 July 2,262 97 142 166 147 202 -55 -2,945 -2,603 Aug. 2,643 692 114 176 255 438 -183 -3,913 -2,801 Sept. 4,099 170 53 174 162 514 -352 -3,835 -4,024 Oct. Nov. Bec. 2,887 3,096 3,510 207 1,039 953 105 84 58 132 191 291 247 314 219 574 606 1,049 -327 -292 -830 -3,637 -4,561 -4,977 -4,044 -3,622 -4,958 Jan. 3,407 720 27 177 342 1,165 -823 -4,550 -5,469 Feb. Mar 2,132 *2,490 562 *-50 77 24 123 125 205 294p 1,593 1,859p -1,388 6 -1,5 5p -4,187 -4,273 -5,436 -5, h47 1973 -- 1973 -- Feb. 7 2,293 642 1 120 147 1,232 -1,085 -3,686 -5,407 14 21 2,304 1,683 1,125 362 175 128 112 155 188 505 1,991 1,670 -1,803 -1,167 -4,906 -4,527 -5,265 -4,883 28 2,191 190 0 104 -14 1,482 -1,496 -3,628 -5,829 Mar, 7 1,976 11 27 126 341 1,688 -1,347 -3,760 -6,235 14 1,973 -73 44 142 23 1,491 -1,468 -4,883 -5,920 21 28 *2,740 +1,028 * -96 * -83 12 12 168 63 249 7 0p 2,139 2,013p -1,890 -1,943p -4,719 -4,062 -6,075 -5,269 *3,342 * 55 507p ], *2,549 -1,248p *190 -3.567p -5, -1,578p -4,335p -7,165p Apr. 4 II 18 25 NOtes: 72 15 25p 6 0p Government Security deaLer trading positions are on a conmitment agreements maturing in 16 days or more, are indicators of dealer are debt issues still in syndicate, excluding trading positions. less net Federal funds purchases. Weekly data are daily averages which are Friday figures. *STRICTLY CONFIDENTIAL -7 8p 755 p 1,500 p aslis. Trading positions, which excLude Treasury bits ilnancea holdings available for sale over the near-term. Other security The basic reserve deficit is excess reserves less borrowing at for statement weeks, except for corporate and municipal issues 83 5p by repurcnase dealer positions Federal Reserve in syndicate CONFIDENTIAL (FR) APRIL 13, 1973 Table 5 SELECTED INTEREST RATES Per Cent Short-term Period Federal Funds Treasr 90-day ~ .. (1) (2) ~~ _ CD's l l bi t-year ~ ~ ............. 90-119 day Commercial paper (4) ~ ~ Prime-NYC ~60-89 day d^ a (5) Ass Utility New Recently Issue Offered 90-119 day (b) Municipal Bond Buyer (7) (8) (9) Long-term FNMA Auction (10-Yr Constant Yields Maturity) __ (10) 5.38 3.18 5.13 3.03 5.50 3.75 5.38 3.13 5.50 3.50 7.60 6.99 7.46 7.12 5.54 4.96 6.58 7.18 5.61 6.44 5.15 7.13 5.63 7.13 5.38 6.75 5.50 7.52 7.29 7.60 7.26 5.35 5.00 6.76 6.42 1972 -- Mar. 3.83 3.73 4.10 3.73 3.98 7.24 7.24 5.31 6.07 Apr. May June 4.17 4.27 4.46 3.71 3.69 3.91 4.55 4.45 4.60 4.34 4.15 4.38 4.47 4.33 4.50 7.45 7.38 7.32 7.40 7.38 7.36 5.43 5.31 5.34 6.19 6.13 6.11 July Aug. Sept. 4.55 4.80 4.87 3.98 4.02 4.66 4.83 4.75 5.07 4.63 4.65 4.88 4.75 4.78 5.00 7.38 7.37 7.40 7.37 7.34 7.42 5.41 5.30 5.36 6.11 6.21 6.55 Oct. 5.04 5.06 5.33 4.74 4.78 5.07 5.21 5.18 5.40 5.00 5.00 5.19 5.19 5.13 5.38 7.38 7.09 7.15 7.38 7.18 7.18 5.19 5.02 5.05 6.48 6.28 6.36 5.94 6.58 7.09 5.41 5.60 6.09 5.76 6.17 6.76 5.63 6.16 6.78 5.75 6.28 6.75 7.38 7.40 7.49 7.35 7.41 7.51 5.05 5.13 5.29 6.46 6.64 6.71 14 21 28 6.21 6.58 6.79 6.75 5.68 5.45 5.49 5.72 6.13 6.13 6.16 6.25 6.13 6.13 6.13 6.25 6.25 6.25 6.25 6.38 7.46 7.34 7.43 7.39 7.37 7.45 5.16 5.06 5.13 5.22 6.64 6.62 6.65 6.65 7 14 21 28 7.02 7.13 6.96 7.11 5.83 6.25 6.28 6.40 6.65 6.88 7.00 6.63 6.63 6.88 7.00 6.75 6.75 6.75 6.75 7.52 7.45 7.50 7.60 7.53 7.44 5.27 5.34 5.35 5.26 6.67 6.72 6.76 6.71 4 11 18 25 7.18 6.84 6.44 6.26 7.08 7.13 7.13 7.00 6.75 6.75 7.51 7.43 40 . p 5.22 5.07 6.70 6 6. 4p 1972 -- High Low 1973 -- High Low Nov. Dec. 1973 -- Jan. Feb. Mar. 1973 -- Feb. Mar. Apr. - Notes: 7 5.92 7 '" 5.87 -'L~--~---~-~--- Columns 5 and 6 are one-day Wednesday quotes. For columns 7,8 and 10 the Weekly data for columns 1 to 4 are statement week averages of daily data. Column 9 is a one-day quote for the Thursday following the end of weekly data is the mid-point of the calendar week over which data are averaged. the statement week. Column 11 gives FNMA auction data forthe Monday preceding the end of the statement week. in the bi-weekly auction for short-term forward comtitments for Government underwritten mortgages. The FNMA auction yield is the yield Appendix Table I CONFIDENIAL (FR) RESERVES AND MONETARY VARIABLES April 13, 1973 Money Stock Measures Reserves Period Total (1) Nonborrowed (2) Available to Support Pvt. Deposits (3) I 1 (4) M2 (5) M3 (6) Bank Credit easures Ad justed TotT Credit Loans and Proxy Investments (7) (8) Total Time (9) time Other than CD' s (10) Other _ Thrift Institution DeDosits . CD's (11) (12) (Per Cent Annual Rates of Growth) (Dollar Change in Billions) I +7.5 -1.1 +6.1 +7.2 +10.6 +5.3 -2.8 +9.6 +8.1 +7.1 1st Half 1971 2nd Half 1971 +9.7 +4.4 +9.6 +6.3 +10.7 +3.4 1st Half 1972 2nd Half 1972 +11.7 +9.0 +12.1 +2.0 +8.6 +10.4 +6.5 +2.3 +6.6 +6.0 1968 1969 1970 1971 1972 +8.1 -1.7 +8.6 +7.2 +9.7 U.S. Gov't. De a d (14) Nondeposit Fqtids (13) I 1 I -0.6 +0.4 +8.2 +9.4 +11.6 +11.0 +3.9 +8.1 +11.3 +14.0 +11.5 -4.8 +17.9 +18.2 +15.5 +11.2 +1.4 +11.1 +16.7 +13.3 +6.4 +3.5 +7.7 +17.5 +16.8 +2.9 -12.4 +14.4 +7.7 +10.1 +2.6 +13.0 -8.4 -7.6 +0.4 +16.4 +9.8 +10.1 +8.4 +11.5 +10.6 +21.6 +13.4 +20.0 +12.1 +19.6 +14.0 +4.3 +3.4 -7.1 -0.4 -1.4 +1.1 +10.8 +10.3 +13.0 +12.1 +11.4 +11.1 +12.8 +14.2 +15.4 +14.5 +13.7 +12.1 +17.3 +15.0 +4.4 +5 .7 -0.3 +0.6 +0.4 +4.1 +1.9 +6.0 +8.7 +8.9 +6.7 +9.8 +9.7 +11.1 +9.8 +16.6 +8.0 +15.9 +14.2 +13.3 +1.7 +1.8 -0.4 +1.1 +10.5 +15.7 +9.5 +13.6 +14.4 +15.4 +14.8 +16.1 +10.8 +12.3 +11.6 +19.7 +14.3 +16.2 +13.2 +0.8 +3.7 +2.4 +3.3 -0.3 +0.4 +0.3 -0.4 +0.5 -1.1 +1.4 +12.5 +11.7 +0.5 +0.9 -0.1 -0.3 +0.2 -1.7 +1.1 +1.1 +0.7 -1.3 -1.0 -0.7 +7.8 +9.3 +8.3 +3.6 +6.0 +6.6 +8.3 +2.6 +8.4 +11.4 +10.8 +2.9 +8.0 +13.5 +13.0 +10.1 +3.0 +14.9 +7.4 +7.7 +8.5 +9.5 +0.5 +1.1 -0.3 +0.4 Semi-Annuall y Quarterly3rd Qtr. 1971 4th Qtr. 1971 +3.2 +3.6 1972 1972 1972 1972 +10.4 +12.6 +3.6 +14.2 +10.7 +13.1 -0.8 +4.8 +10.4 +6.6 +9.9 +10.6 +9.2 +6.1 +8.2 +8.6 +12.7 +8.5 +10.3 +10.2 +14.9 +10.8 +12.4 +11.5 +11.0 +11.5 +9.8 +12.1 let Qtr. 1973 +8.8 -7.2 +10.4 +2.0 +5.9 4+8.5 +15.2 +20.3 +23.1 +21.8 -5.2 +14.5 +22.1 +8.8 +6.4 +5.2 +7.6 -1.9 +18.2 +11.4 +12.5 +26.7 -5.7 +11.0 +21.7 +9.4 +8.0 +2.9 +0.7 -6.1 +11.0 +6.5 +13.4 +6.8 +17.7 +16.2 +11.6 +12.8 +18.2 +12.9 +13.6 +15.9 +12.0 +13.3 +12.2 +9.2 +7.2 +16.2 +12.2 +15.6 +6.6 +10.0 +9.6 +9.5 +11.9 +10.5 +13.4 +14.2 +12.4 +19.9 +5.4 +20.0 +2.3 +10.2 +9.8 -10.9 +10.4 +15.1 +12.4 +7.9 +8.3 +9.2 +12.5 49.3 +8.7 +10.1 +7.9 +12.2 +13.2 +16.8 +9.0 +6.9 49.7 +12.9 43.2 +20.8 +7.7 +1.0 +14.7 +11.5 +8.0 +4.0 +6.4 +12.7 44.6 7.2 17.2 +35.8 -22.1 +13.1 +31.3 -41.3 472.8 -4 7 +10.7 +13.0 -0.5 +6.1 +0.5 +6.4 +5.9 +5.4 +9.9 +8.7 +6.6 +8.1 +16 4 +20.3 +18.6 +21.9 +19.4 slt Qtr. 2nd Qtr. 3rd Qtr. &th Qtr. 1972: Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1973' Jan. feb. Mar. p 4-15.5 +3.9 +5.2 +14.2 +10.7 +10.1 +11.3 +13.8 +11.6 411.4 411 9 410.0 Reserve requiremente on Eurodollar borrowings are iinelided beginning Ortober 16, October 1, 1970. p - Preliminarv. NOTE- 1969, +18.1 +11.9 +11.4 +20.6 +10.7 +14.0 +14.4 +9.5 +19.2 +15.4 +13.2 +7.8 +13.0 +11.4 +0.1 +0.6 +0.1 +1.5 +1.5 +0.7 +0.8 +0.8 +14.2 +17,1 +14.0 +10.2 +12.8 +10.4 +11.2 +23.3 +16.6 +18.2 +13.4 +21.6 +16.9 +16.7 +14.8 +16.3 +14.4 +12.3 412.5 +15.7 +21.6 +30.9 +12.9 + .7 +9.6 +19.4 +8. 1 +9.0 +1.2 +4.5 +6.1 +11.5 +12.3 and requirements on bank-related commercial paper +0.8 +0.2 +1.2 +1.9 +0.1 -0.2 +0.2 +0.1 +0.3 -0.1 +0.2 +1.2 +0.1 +0.6 -0.4 +0.6 +0.1 +0.5 +0.4 +0.2 +0.2 are included beginning CONFIDENTIAL (FR) Appendix Table II April 13, 1973 RESERVES AND MONETARY VARIABLES (Seasonally adjusted, Money Stock Measures Reserves Totat (1)T- Period Annually: Dec. 1968 Dec. 1969 Dec. 1970 27,219 27,959 29,121 7 ___ billions of dollars) Bank Credit Measures Total Adjusted Total Loans and Credit Time Investments Proy (10) (9) (8) _ Available to Support Pvt. NonDeposits horrowed (3) (2) Total (4) Pvt. Dep. (5) 26,416 26,699 28,727 24,791 25,339 26,975 201.6 208.8 221.3 158.2 162.7 172.2 382.5 392.3 425.2 577.2 594.0 641.3 306,6 307.7 332.9 390.6 406.0 438.9 204.2 194.4 229.2 M MI 2 (6) 3 (7) Other CD's (13) NonDeposit Funds (14) U.S. Gov't. Demand (15) 194.7 201.7 216.1 23.3 10.9 25.3 7.0 20.0 11.6 4.9 5.3 6.5 Thrift Institution Deposits (12) 180.9 183.5 203.9 Time Other than CD's (11) 19 1--Dec. 31,209 31,060 28,907 236.0 183,4 473.8 727.7 364.3 488.6 270.9 237.9 253.8 33.0 4.0 6.1 1972--Jan. Feb. Mar. 31,776 31,639 32,021 31,751 31,601 31,891 29,172 29,329 29,656 236.2 239,1 241.4 1.83.3 185.8 187.7 477.9 483.9 488.9 735.7 746.0 754.8 367.1 369.3 374.3 494.4 499.5 507.8 274.9 278.6 281.3 241.7 244.8 247.5 257.8 262.1 265.9 33.2 33.7 33.8 4.0 3.6 3.7 6.3 4.6 5.7 Apr. May June 32,612 32,852 13,027 32,467 32,720 32,938 29,824 29,920 30,144 243.0 243.8 245.1 189.1 189.6 190.7 492.1 495.5 499.3 761.5 767.9 775.1 378.1 383.0 385.1 510.1 518.6 519.8 284.3 288.6 291.7 249.1 251.8 254.2 269.4 272.4 275.7 35.2 36.8 37.5 3.5 3.7 3.8 6.8 7.5 6.2 July Aug. Sept. 33.171 33.381 33,018 33,038 32,870 30.317 30,562 30,890 247.7 248.6 250.1 193.1 193.8 194.8 504.5 508.4 512.1 784 . 791.6 799.1 388.3 391.4 994.5 526.2 532.2 537.5 295.0 298.9 301.9 256.8 259.8 262.0 279.6 283.3 286.9 38.3 39.1 39.8 3.9 4.2 4.1 5.2 4.5 5.1 33.832 31,883 33.295 31,297 30,063 30,973 29,496 28,862 251.6 252.7 255.5 195.9 196.5 198.7 516.4 519.8 525.1 807.0 813.7 822.0 398.4 401.9 406.4 542.6 551.9 556.8 304.8 308.4 312.8 264.8 267.1 269.6 290.6 293.9 296.9 40.0 41.2 43.2 4.3 4.3 4.4 6.3 6.9 6.5 32,242 30,848 29,787 29.521 29.411 29,296 29.61.4 255.4 256.7 256.8 198,4 199.3 198.9 527.9 530.5 532.9 828.8 31,649 1,995 409.2 414.8 412.9 565.4 575.7 585.0 316.9 322.6 330.9 272.5 273.8 276.0 300.8 304.3 306.5 44.4 48.8 54.9 4.5 4.5 4.9 7.1 7.2 7.5 315.5 272.0 43.5 4.4 8.6 315.6 316.7 317.3 318.9 271.6 272.8 272.7 273.4 ;: ;: 44.0 43.9 44.5 45.5 4.1 4.6 4.7 4.7 7.2 6.8 6.9 6.7 320.1 322.2 323.2 32).0 272.8 274.0 274.1 274.4 ::: ::::: 'i49. :iii ; iiiiiii i 47.3 48.2 49.1 50.7 4.5 4.4 4.4 4.7 5.5 6.9 8.6 7.9 327.5 330.1 331.4 275.3 275.6 276.2 i.;ijii: 52.2 54.5 55.2 4.8 5.0 4.9 7.0 6.3 8.1 333.2 276.9 56.3 5.0 8.2 334.3 276.6 . 49 7.7 13.327 Ott, NOv. Dec, 31,309 1973--Jan. eb. Mar. p 834.8 839.4 Weekly: 412.0 3 31,959 29.886 29,367 258.2 200.8 530,2 10 17 24 31 1,898 3,245 1,791 2,1.58 31.007 31,720 30,537 30.576 29,241 29,91.5 28,958 29,548 254.6 255.7 255.0 254.3 197.4 198.7 198.0 197. 526.2 528.5 527.8 527.7 407.4 409.4 409.1 4:: 409.8 7 14 21 28 1.,609 31,568 1.945 31,476 30, 74 29,511 2 9.767 29,530 29,167 29.111 29,671 29,235 256.3 256.4 258.3 255.9 1.98.9 199.0 200.6 198.6 52,0 530.4 532,3 530.3 11.3 413.0 7 14 21 32,305 31,718 32,006 30,238 29,148 28,679 29,850 29,296 29.676 251.6 256.1 257.5 199.R 198.3 199.5 533.0 531,7 533.7 28 p 31,687 2 ,338 29,42 256.1 198.2 4 p 32,630 30,560 30,093 257.5 199.4 1973--Jan. Feb. fat , Apr. NOTE: p - Reserve ? 2.9 .) 534.1 : iii iiii 617.5 417.2 ii;i: iiii 418.8 419.9 423.2 1 i iii.iii.. .i . i:: ::: : :::::::::: : ::: :::::: i iiiiiiiii iii iiiiijji iiiiiiiiiiii:::iii A23.6 7iii 426.0 ........ . :.:::::::.:: iiiii l;: : iiiiii i:: iii 57 8 requirements on Euro-dollar borrowings are included beginnng October 16, 1969, and requirements on bank-related commercial paper are included beginning Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial paper, and Euro-dollar October 1, 1976. Monthly data are daily averages except for nonbank commercial paper figures which borrowings of U.S. banks. Weekly data are daily averages for statement weeks. deposits. institution loans and investments and thrift total Weekly data are not available for M3 day of month. are for last Preliminary.
@FedFRASER