Full text of Federal Open Market Committee Meeting Minutes, Transcripts, and Other Documents : Meeting, March 31, 1981 : Bluebook

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Strictly Confidential (FR)

Class I FOMC

March 27, 1981

MONETARY AGGREGATES AND
MONEY MARKET CONDITIONS

Prepared for the Federal Open Market Committee
By the staff

Board of Governors of the Federal Reserve System

STRICTLY CONFIDENTIAL
CLASS I - FOMC

March 27, 1981

MONETARY AGGREGATES AND
MONEY MARKET CONDITIONS

Recent developments
(1)

Abstracting from the effect of nationwide NOW accounts, the

decline of transactions balances that characterized the November to February
period appears to have been reversed most recently, with adjusted M-1B
estimated to increase at about an 8-3/4 percent annual rate in March,
as shown in the table below.

Nonetheless, M-1B's growth over the first

three months of the year remains about 2-1/4 percentage points below the
Committee's target for that period.

The weakness in M-1B is significantly

greater than predicted by the Board's quarterly econometric model as
well as other models, given actual interest rates and nominal GNP.

On a

quarterly average basis, adjusted M-1B increasedat only about a 1/2 percent
annual rate, and the income velocity of this aggregate rose at an annual
rate of almost 14-1/2 percent--a record for the period since the Korean war.
Monetary Aggregates
Seasonally Adjusted Annual Growth Rates
First Quarter 1981

M-1B
Actual
Adjusted 1/

Jan.

Feb.

12.2
2.9

3.5
-2.0

March *

12.4
8.7

QIV '80QI '81

9.3
3.2

5.2
0.4

5.5

Target
M-2
Actual
Target

Dec.March *

5.7

7.6

16.5

10.0
8.0

7.0

*
Partially projected.
from the estimated impact of shifts from savings accounts
Abstracting
1/
than demand deposits to NOW accounts.
other
and assets

-2It is possible that the demand for money shifted downwards in response to
extraordinarily high levels of interest rates in the fourth quarter and the
introduction of nationwide NOW accounts in the first, both of which could have
induced the public to review more intensively its cash management techniques.
(2)

In contrast to adjusted M-1B, the growth of M-2 is expected

to expand about 2 percentage points above the Committee's December to
March short-run target.

The nontransactions component of M-2 was buoyed by

record growth in money market mutual funds (MMMFs), more than offsetting
the greater than expected weakness in small time and savings deposits.

In

March, the level of M-2 was at the upper end of the Committee's longer-run
range.
(3)

Banks' issuance of large CDs slowed in February and amounts

outstanding have been declining in March as business short-term credit demands
at domestic offices of U.S. banks ebbed.

The expansion in total commercial

bank credit moderated considerably in February, and available data suggest
further weakening in March.

Growth of large CDs at S&Ls also slowed in the

early months of 1981, even as other deposits weakened, probably reflecting
adverse publicity regarding their earnings problems 1/ Despite the recent
weakness in CDs, M-3 expanded at about a 10-1/4 percent annual rate over the
first three months of the year, placing the level of M-3 in March just above
the upper end of the Committee's longer-run range.
(4)

Demand for total reserves weakened in February and the first

weeks of March in response to slow growth in reservable deposits and a drop
in excess reserves to more normal levels following a sustained period in

1/

In early March, five large S&Ls had their commercial paper ratings downgraded by rating agencies, and investors became more cautious about
uninsured liabilities of thrifts.

which they had been unusually high, presumably in response to the Monetary
Control Act.

Borrowing in the first two full weeks in February dropped

to $1.1 billion, below the initial assumption of $1.3 billion used in constructing the nonborrowed path, and the funds rate began declining from
the over 17 percent level of early February.

By the latter part of February

the funds rate had moved to around the lower end of the 15 to 20 percent
range specified by the Committee.

In a telephone conference on February 24,

the Committee agreed to accept some shortfall in the narrow aggregates as
consistent with its objectives for the year, resulting in a reduction in
nonborrowed reserve targets in the latter part of February and early March
that was expected to keep borrowing at the discount window from declining.1/
This path adjustment contributed to a decline in nonborrowed reserves in
February roughly in line with the decline in total reserves, as shown in the
table below.

In March nonborrowed reserve growth surged, and borrowings and
Reserve Aggregates
(Seasonally Adjusted Annual Rate of Growth)
Jan.

Feb.

March 2/

8.2

-12.4

22.6

Total Reserves

-1.0

-14.7

10.9

Monetary Base

2.7

2.3

7.2

1,303
183

941
299

Nonborrowed Reserves

Memo: ($ mils., n.s.a.)
Average level of:
Adjustment borrowing
Excess reserves

1,347
544

See Appendix I for all adjustments made to reserve paths during the
intermeeting period.
2/ March data are estimated for the period after March 25.

1/

the funds rate declined on average from February levels.

The federal funds

rate averaged around 13-3/4 percent over the past two statement weeks, but
trading most recently has been in a 14-1/2 to 15-1/2 percent range.
(5)

Private short-term interest rates have fallen 2 to 3-1/2

percentage points on balance since the early February Committee meeting, and
with these further declines some are more than 7 percentage points below their
In the Treasury bill market, yields have fallen less--3/4 to

December peaks.

2 percentage points since the last meeting and 2 to 4 percentage points since
December-as the Treasury has continued to borrow heavily in the bill market.
In February and March, the Treasury raised more than $20 billion in new
money in bill auctions, including $13 billion in cash management bills
maturing in the second quarter.

The bank prime rate was lowered in steps

from 19-1/2 percent at the beginning of February to 17 to 17-1/2 percent.
(6)

In contrast to short-term rates, bond yields have risen on

balance since early February-by roughly 30 basis points in the case of
Treasury securities.

The Treasury has raised almost $11 billion in note

and bond sales since the mid-quarter financing and next week will auction a
$2-3/4 billion 7-year note.
relatively large.

Public issuance of corporate bonds has remained

During the intermeeting period, the average commitment

rate on new fixed-rate mortgages at S&Ls rose further to 15.40 percent.
(7)

The dollar has fluctuated over a wide range on exchange

markets during the past several weeks, responding primarily to the relative
movement of U.S. and foreign interest rates and to tensions in Eastern
Europe.

On balance, the weighted average exchange value of the dollar

has risen 2 percent since the February Committee meeting.

-5-

The U.S. authorities have purchased about $3/4 billion equivalent of
foreign currencies.
(8)

The table on the next page shows seasonally adjusted annual

rates of change, in percent, for selected monetary and financial flows over
various time periods.

M-1A and M-1B data in parentheses are adjusted for

the estimated impact of nationwide NOW accounts.

1/
1980----

1978-

197 /
1979-

Nonborrowed reserves

6.3

0.3

7.8

Total reserves

6.2

2.6

7.1

Monetary base

9.2

7.8

8.8

7.4

5.0

5.0

Mar. '81
over
Dec. '80
---

Mar. '81
over
Feb.
'81
----

6.1

22.6

-1.6
4.1

10.9
7.2

Concepts of Money
M-1A (Currency plus demand
deposits) 2/

-20.7
(2.7);'

-3.6
(8.7)-

M-1B (M-lA plus other checkable
8.2

deposits)

M-2 (M-1B plus small time and
savings deposits, money market
mutual fund shares and overnight RP's and Eurodollars)
M-3 (M-2 plus large time deposits
and term RP's)

7.7

7.3

9.3 5/
(3.2)-

12.4

(8.7)'

9.0

9.8

10.0

16.5

11.3

9.8

9.9

10.3

9.2

13.4

12.6

8.4

Bank Credit

Loans and investments of
all commercial banks 3/

8.0

7.3 p

-2.8 p

1.8

5.1

-2.6

Managed Liabilities of Banks
(Monthly average change in
billions)
Large time deposits

4.2

1.6

0.6
1.4

2.1
1.3

Net borrowing from own foreign

branches
Other borrowins

4

/

"1.3

-2.0

-3.2 p

-4,7 p

n.a.

n.a.

n.a.

1/ QIV to QIV.
2/ Other than interbank and U.S. Government.
3/ Includes loans sold to affiliates and branches.
4/ Primarily federal funds purchases and securities sold under agreements to repurchase.
5/ Adjusted for nationwide NOW accounts.
p Preliminary estimate.
n.a. Not available.
NOTE: All items are based on averages of daily figures except for data on total loans
and investments of commercial banks, commercial paper, and thrift institutions--which
are derived from either end-of-month or Wednesday statement date figures. Growth rates
for reserve measures in this and subsequent tables are adjusted to remove the effect
of discontinuities from breaks in the series when reserve requirements are changed.

/

Prospective developments
(9)

Shown below for Committee consideration are three alternative

policy strategies for the second quarter.

Since March data for the aggregates

are still partially estimated, the alternatives are specified in terms of the
four-month February to June period (with implied growth rates for March to June
also shown based on the currently projected March levels).

The M-1B growth

targets abstract from the estimated impact of nationwide NOW accounts, as does
the Committee's longer-run target.

(More detailed and longer-run data for

the aggregates, on both an adjusted and unadjusted basis, including those for
M-1A, are shown in the tables on pp. 8 and 9.)

The last line of the table

indicates federal funds rate ranges thought by the staff to be consistent
with the three alternatives.

Growth from February to June
M-1B
M-2
Implied growth from
March to June
M-1B

M-2
Intermeeting federal funds
rate range

(10)

Alt. A

Alt. B

Alt. C

8-3/4
12-3/4

6-3/4
12-1/4

5-1/2
12

6

8-3/4

4-1/2

11-1/2

10-3/4

10-1/4

13 to 19

14 to 20

15 to 21

As shown in the first chart on the following pages, the

alternative A target specifications are designed to return adjusted M-1B by
June to the midpoint growth path of the Committee's QIV '80 to QIV '81
longer-run range of 3-1/2 to 6 percent.

Alternative B specifies slower

growth in M-1B that would carry it only to the lower end of the Committee's
longer-run range by June but, assuming a continuation of that growth rate,
to the midpoint of the longer-run range by September.

Under either of these

Chart 1

CONFIDENTIAL (FR)
Class II-FOMC

Actual and Targeted M-1B

M1-B
-

Billions of dollars
-460
Observed Level

Level Adjusted for Impact of Nationwide NOW Accounts
* * * Short-Run Alternatives

....

6%

-- 430

-.

-1420

-- 410

I
O

I
N

1980

1
D

I

I
j

F

I
M

I
A

1

I

M

I
J

1981

I
A

I
S

I
0

N

D

CONFIDENTIAL (FR)
Class
II-FOMC

Chart 2

Actual and Targeted M-2

M-2

Billions of dollars
-11840
Actual Level

SShort-Run Alternatives

C1

1820

9%

-1800

-- 1780

1760

1740

7

-- 1720

-41700
1'

I

1

/
/
II /7
I

•
O

N

O

1980

I
J

!
F

M

I

A

I
I

I
M

I

lI
J

I

1981

J

I

A

I

S

.I

I

I

O

N

-

1680

-

1660

1640
0

Chart 3

CONFIDENTIAL (FR)

Class II-FOMC

M-3 and Bank Credit
M-3

Billions of dollars
2150
Actual Level

-

S* Short-Run Alternatives
2100

--

61 2%
2050

2000

' ,00010
-41950
*

j
0

I
N

I
D

I
J

I
F

I

Note: A.8, and C alternatives are indistinguisnable on this scale.

I
A

M

1

I
J

M

1980

I

I
A

J

I

I
S

1
N

O

*4 ul
nnf
II
I~uv

0

1981

BANK CREDIT r

Billions of dollars
-1350

- Actual Level

-- 11300

-1250

I

SI
O

N

1980

0

J

I

I

F

IL I
I

II

M

I

I

I

A

I

II II

I

I

I

I

I

I

A

M

1981

I

I

m

S

0

I
N

1200
12

0

0 0

Alternative Levels and Growth Rates for Key Monetary Aggregates
M-1A

1981--February
March
April
May
June

M-IB

Alt. A

Alt. B

Alt. C

384.6

384.6
387.4
389.3
391.2
393.1

384.6
387.4
388.7
390.1
391.5

387.4
390.2
393.1
396.0

Alt. A

Alt. B

Alt. C

412.2
415.2
418.1
421.2
424.3

412.2
415.2
417.2
419.3
421.4

412.2
415.2
416.6
418.2
419.8

Growth Rates
Monthly
1981--April
May
June

February '81 June '81

8.7
(1.6)
8.9
(5.2)
8.9
(6.5)

5.9
(-1.3)
5.9
(2.0)
5.8
(3.3)

4.0
(-3.3)
4.3
(0.3)
4.3
(1.6)

8.7
(10.5)
8.9

5.8
(7.7)
6.0

(10.2)

(7.4)

8.8
(10.0)

(7.0)

8.9
(2.5)

6.6
(0.1)

5.4
(-1.2)

8.8
(10.9)

(8.7)

8.9
(4.5)

5.9
(1.3)

4.2
(-0.4)

(10.1)

(7.4)

4.4
(6.0)

-0.6
7.5

-0.6
5.5

-0.6
4.4

0.4
7.5

0.4
5.7

0.4
4.6

6.0

6.7

4.3
(6.3)

4.6
(5.9)
4.6
(5.6)

5.5
(7.5)

March '81 -

June '81

8.8

6.0

Quarterly Average
1981--QI

QII

NOTE:

Growth rates shown in parentheses are for the observed levels of the aggregates.

Alternative Levels and Growth Rates for Key Monetary Aggregates (cont'd)
M-3

M-2
Alt. A

Alt. B

Alt. C

Alt.

1692.0
1715.2
1731.2
1748.6
1764.1

1692.0
1715.2
1730.3
1746.7
1761.1

1692.0
1715.2
1729.7
1745.6
1759.5

1993.3
2008.5
2020.8
2037.3
2054.8

1993.3
2008.5
2020.3
2036.3
2053.1

1993.3
2008.5
2019.7
2035.0
2050.9

1981--April
May
June

11.2
12.1
10.6

10.6
11.4
9.9

10.1
11.0
9.6

7.3
9.8
10.3

7.1
9.5
9.9

6.7
9.1
9.4

February '81 June '81

12.8

12.3

12.0

9.3

9.0

8.7

March '81 June '81

11.4

10.7

10.3

9.2

8.9

8.4

7.0
12.2

7.0
11.7

7.0
11.5

1981--February
March
April
May
June

A

Alt.

B

Alt.

C

Growth Rates
Monthly

Quarterly Average
1981--QI
QII

10.6
8.8

10.6
8.6

10.6
8.3

-10-

alternatives M-2 would probably be above the upper end of its range in June,
and might well remain above the range over the balance of the year (assuming
M-1B growth at its midpoint rate for the year as a whole).

Alternative C is

designed to increase the odds of constraining M-2 growth to within its
longer-run range for 1981.

This would appear to involve growth in M-1B.

for the year at the lower end of its longer-run range, and alternative
C specifies such a trajectory for M-1B.

The three strategies thus not only

imply options for how rapidly the Committee wishes to target a return of
M-1B to within its longer-run range, but also for the weight it wishes to
place on obtaining an M-2 growth within its own longer-run range.
(11)

Demands for transactions balances are likely to expand rapidly

over the second quarter as a whole.

Although real GNP in that quarter is

projected to show no change, nominal spending is expected to increase
rather rapidly, and the staff does not anticipate that the sharp downward
shift in money demand of the first quarter will be repeated in the second.
The resulting anticipated strengthening of M-1B will contribute to a rapid
growth in M-2.

Though the expansion of the nontransaction component of

M-2 is expected to slow from its exceptionally strong March pace, it will
probably be faster on average over the next three months than in the first
quarter.
(12)

The projected strengthening of demand for transactions

balances implies that interest rates will probably be under upward pressure
over the coming quarter, particularly under the alternative B and C specifications, but also possibly to a degree under alternative A.

Under

alternative A--which involves growth in total reserves from March to June

-11-

at a 9-3/4 percent annual rate-we would expect the funds rate to be
in a 14 to 16 percent range over the next few-weeks, with borrowing at the
discount window ranging around $1 billion, given the current discount rate
structure.

Many market participants appear to be expecting rate declines in

the months ahead.

For example, in the futures market, 3-month bills for

June delivery are quoted at 11-7/8 percent, as compared to the current cash
market quote of around 13 percent.

Against this backdrop, a failure of the

funds rate to decline from current levels would tend to exert upward pressure
on short-term interest rates generally.

Of course, if money demand tends to

be on the weak side this spring-as could well develop if the economy is even
less strong than projected-lower funds rates, borrowing, and market rates
generally would occur.
(13)

Whatever upward interest pressures develop over the months

ahead are likely to be mainly the product of constraints on money growth
relative to demand.

In the credit markets themselves, funds raised are

expected to drop in the second quarter.

This reflects a greater than

seasonal decline in Treasury borrowing, as the combined Federal budget
moves from a $37 billion deficit in the first quarter to an $11 billion
surplus in the second.

In the projected interest rate environment, corporate

and tax-exempt bond offerings are unlikely to rise further over the spring
months, although business demands on banks will probably pick up from the
recent depressed pace.
(14)

Greater restraint on money growth relative to demand would

be imposed under alternatives B and C, which involve limiting growth in
adjusted M-1B to rates of 6 and 4-1/2 percent, respectively, over the next
three months-substantially lower rates than the 8-3/4 percent of alternative
A.

Growth in total reserves over the period would be at annual rates of

-12-

7-3/4 and 6 percent under alternatives B and C, respectively.

A federal funds

rate in the area of 15 to 17 percent, or somewhat higher, might emerge over
the next few weeks under alternative B1/.

would develop under alternative C.

Still greater rate pressures

Borrowing at the discount window might

be around $1-1/2 billion under B and, of course, higher under C.

The upward

response of market interest rates, particularly short-term rates, to the
increased pressures on bank reserve positions of alternatives B and C may be
quite marked over the period ahead.

Any rise in long-term rates, though,

might be muted as corporate borrowers back away from the market in anticipation of lower rates later.
(15)

From the perspective of the year as a whole, the degree of

rate pressure we would foresee over the next several months under alternative
C, which is consistent with a strategy of lowering M-1B growth for the year
to the bottom of its range, would be likely to weaken the outlook for GNP
relative to the current staff forecast (which is based on alternative B).
As a result, this alternative carries with it a potential for a drop-off of
interest rates from peak levels later in the year, in response to a pronounced cyclical weakening of the economy.

By year-end interest rates

under alternative C thus could be lower than under alternative B.
(16)

Under any of the alternatives presented, the interest

rate outlook suggests continued substantial earnings pressures on thrift
institutions over the next few months.

Thrifts are likely to continue

employing funds to a great extent to acquire short-term assets both to
bolster liquidity and to add to the average return on their assets.

They

probably would continue to be reluctant lenders in the mortgage market.

1/

See Appendix II for interest rate projections for 1981 under
alternative B.

-13Directive language
(17)

Given below is a suggested operational paragraph for the

directive consistent with the form of the directive adopted at the meeting

in early February.

Because monetary aggregates data for the second half

of March are projected, the language calls for expansion of reserve aggregates at a pace consistent with the desired rates of monetary growth over
the four months from February to June.

The associated monetary growth

rates on a quarterly average basis are from the fourth quarter of 1980 to
the second quarter of 1981.

The specifications adopted at the early

February meeting are shown in strike-through form.

For simplification,

the Committee may wish to consider not including M-1A in the directive,
as is shown with strike-through in the paragraph below.
In the short-run the Committee seeks behavior of reserve
M-1A
aggregates consistent with growth in[DEL:

and]M-1B AND M-2 from

5-to-6]
March] JUNE at annual rates of ABOUT [DE:
[DEL:
December] FEBRUARY to [DEL:
____percent, RESPECT8]
in M-2 at a rate ofabout
____ percent and [DEL:

abstracting from] AFTER ALLOWANCE FOR the impact of flows into
IVELY, [DEL:
NOW accounts.

M-1A,]M-1B,
These rates are associated with growth of [DEL:

the first quarter] THE
and M-2 from the fourth quarter of 1980 to[DEL:
2-3/4]
percent
2
SECOND QUARTER OF 1981 at annual rates of about [DEL:
7]____ percent, respectively.
____ percent, and[DEL:

It is recognized that

shifts into NOW accounts will continue to distort measured growth
in [DEL:
M-1A-and]M-1B to an unpredictable extent, and operational reserve
paths will be developed in the light of evaluation of those distortions.

If it appears during the period before the next meeting

that fluctuations in the federal funds rate, taken over a period

-14[DEL:
15
20]____
of time, within a range of to

TO ____ percent are likely

to be inconsistent with the monetary and related reserve paths,
the Manager for Domestic Operations is promptly to notify the
Chairman, who

will then decide whether the situation calls for

supplementary instructions from the Committee.

APPENDIX I

RESERVE TARGETS AND RELATED MEASURES
Intermeeting Period
($ millions, not seasonally adjusted)
Targets for
4-week average
Feb. 11 to March 4
NonTotal
borrowed
Reserves
Reserves
(2)
(1)

Projection of
4-week average
Feb. 11 to March 4

Total
Reserves
(3)

Required

Excess

Reserves
(4)

Reserves
(5)

39,396

38,996

400

1,300

39,627

39,227

400

1,131

2/
/

39,671

39,313

358

973

39,622

39,313

309

1,115

Adjustment
Borrowin
(3) - (2)

As of
February 4
(FOMC Meeting)

39,396

38,096

February 6

39,796-1

38,496-

February 13

39,998

February 20

33/
39,973-/

/
38,507='

February 27

39,973

38,259-

39,489

39,34Z

147

1,230

Actual 4-week Avg.

39,592

38,292

39,592

39,342

250

1,300

2/
/

38,69

/

4/

Projection of
4-week average
March 11 to Aoril I

Targets for
4-week average
March 11 to April 1

As of
March 6

40,3005/

39,000 -/

39,819

39,419

400

March 13

40,135- /

38,83561

39,663

39,323

340

/
7001

7/

March 20

40,010-

38,710-

39,661

39,400

261

March 27

40,010

38,710

39,608

39,366

242

Actual 4-week Avg.

3 9 ,60 8 e

38,710e

39,608 e

39,366 a

24 2 e

1/
2/
3/

4/
5/
6/
7/

898

e

Total and nonborrowed reserves paths adjusted upward by $400 million due to multiplier
changes.
Total and nonborrowed reserves paths adjusted upward by $202 million to reflect planned
phase-in of reserve requirements on foreign-related institutions.
Total and nonborrowed reserves paths adjusted downward by $25 million due to weaker
than expected demand for excess reserves. In addition, the nonborrowed path adjusted
downward further by $166 million in line with FOMC telephone consultation of February 24.
Nonborrowed reserves path adjusted downward by $248 million also in connection with
earlier consultation.
Total and nonborrowed reserves paths adjusted upward by $78 million due to multiplier
changes.
Total and nonborrowed reserves paths adjusted downward by $165 million due to multiplier
changes.
Total and nonborrowed reserves paths adjusted downward by $125 million due to multiplier
changes.

Appendix II

INTEREST RATES THOUGHT CONSISTENT
WITH GREENBOOK GNP FORECAST AND
BLUEBOOK ALTERNATIVE B 1/
(Quarterly averages, percent)

Federal
funds
1981--1
II
III
IV

16-7/8
16%
18
19

3-month
Treasury bill
14k
14
16
17

Aaa-Utility
bond
14
14-5/8
14%
14%

Mortgage
Commitment
15-1/8
15%
15-5/8
15%

1/ Assumes that M-1B grows 4% percent, abstracting from the impact
of nationwide NOW accounts, from the fourth quarter of 1980 to the
fourth quarter of 1981.

TABLE 1
SELECTED INTEREST RATES
(Percent)

e dr i o

funds

Market
1-yr.
3-mo.
(1)

Short-term
CDs
Secondary
Auction
Market
6-mo
3-mo

Treasury Bills

(2)

(3)

(4)

(5)

STRICTLY CONFIDENTIAL
CLASS II - FOMC
March 30, 1981
Longf

U.S. Govt. Constant
Maturity Yields

Comm.
Paper
3-mo,.

Bank
Prime
Rate

3-yr.

(6)

(7)

(8)

10-yr.

30-yr.

(9)

(10)

Corp. Ana
Utility
New
Recently
Issue
Offered
(11)

(12)

em
Municipal
Bond
Buyer
(13)

(FR)

home Mortgages
Primary Secondary tarker
Conv.
FNMA
CGKA
Auc.
Sec.
(14)

(15)

(16)

1979--High
Low

15.61
9.93

12.60
8.85

11.89
8.64

12.65
8.87

14.53
9.84

14.26
9.66

15.75
t1.50

11.68
8.76

10.87
8.79

10.42
8.82

11.50
9.40

11.45
9.39

7.38
6.08

12.90
10.38

13.29
10.42

11.77
9.51

1980--(lgh
Low

19.83
8.68

16.73
6.49

14.39
7.18

15.70
6.66

20.58
8.17

19.74
7.97

21.50
11.00

14.29
8.61

13.36
9.51

12.91
9.54

14.51
10.53

15.03
10.79

10.56
7.11

16.35
12.18

15.93
12.28

14.17
10.73

1980--Feb.
Mar.

14.13
17.19

12.86
15.20

12.46
14.03

12.72
15.10

14.30
17.57

13.78
16.81

15.63
18.31

12.84
14.05

12.41
12.75

12.13
12.34

13.57
14.00

13.35
13.90

8.16
9.17

13.03
15.28

14.49
15.64

13.16
13.79

Apr.
May
June

17.61
10.98
9.47

13.20
8.58
7.07

11.97
8.66
7.54

13.62
9.15
7.22

16.14
9.79
8.49

15.78
9.49
8.27

19.77
16.57
12.63

12.02
9.44
8.92

11.47
10.18
9.70

11.40
10.36
9.81

12.90
11.53
10.96

12.91
11.64
11.00

8.63
7.59
7.63

16.33
14.26
12.71

14.61
12.88
12.35

12.64
11.30
11.07

July
Aug.
Sept.

9.03
9.61
10.87

8.06
9.13
10.27

8.00
9.39
10.48

8.10
9.44
10.55

8.65
9.91
11.29

8.41
9.57
10.97

11.48
11.12
12.23

9.27
10.63
11.57

10.25
11.10
11.51

10.24
11.00
11.34

11.60
12.32
12.74

11.41
12.31
12.72

8.12
8.67
8.94

12.19
12.56
13.20

12.66
13.92
14.77

11.53
12.34
12.84

Oct.

12.81

Nov.
Dec.

15.85
18.90

11.62
13.73
15.49

11.30
12.66
13.23

11.57
13.61
14.77

12.94
15.68
18.65

12.52
15.18
18.07

13.79
16.06
20.35

12.01
13.31
13.65

11.75
12.68
12.84

11.59
12.37
12.40

13.18
13.85
14.51

13.13
13.91
14.38

9.11
9.56
10.11

13.79
14.21
14.79

14.95
15.53
15.21

12.91
13.55
13.62

1981--Jan.
Feb.

19.08
15.93

15.02
14.79

12.62
12.99

13.88
14.13

17.19
16.14

16.58
15.49

20.16
19.43

13.01
13.65

12.57
13.19

12.14
12.80

14.12
14.90

14.17
14,58

9.66
10.10

14.90
15.13

14.87
15.24

13.55
14.13

1981--Jan. 7
14
21
28

20.06
19.64
19.35
18.12

14.06
15.10
15.44
15.41

12.15
12.56
12.77
12.90

13.18
14.23
14.47
14.12

16.34
17.19
17.74
17.47

15.63
16.69
17.17
16.84

20.64
20.07
20.00
20.00

12.55
12.98
13.12
13.26

12.27
12.49
12.61
12.78

11.81
12.05
12.21
12.35

14.05
14.07
14.29
14.06

14.10
14.17
14.33
14.08

9.49
9.57
9.68
9.91

14.80
14.85
14.85
15.07

14.89

13.18
13.50
13.62
13.71

4
11
18
25

17.19
16.51
15.81
14.96

14.78
15.32
15.22
14.23

12.71
13.10
13.32
12.81

13.74
14.43
14.76
13.61

16.55
16.50
16.82
15.52

15.98
15.89
16.07
14.75

19.86
19.50
19.50
19.29

13.27
13.65
13.81
13.58

12.84
13.19
13.43
13.14

12.44
12.83
13.00
12.75

9.90
9.99
10.22
10.27

15.00
15.03
15.20
15.30

14.88

14.90

14.30
14.58
14.57
14.85

Mar. 4
11
18
25

15.73
15,53
14.13
13.48

14.35
14.17
13.06
12.64

13.06
12.76
11.96
11.83

14.13
13.43
12.10
12.27

15.59
15.40
14.10
13.47

15.09
14.89
13.64
12.87

19.00
18.71
17.86
17.50

14.01
13.70
13.24
13.33

13 48
13.18
12.80
13.02

13.03
12.76
12.37
12.59

14.53
14.18
13.98

10.40
10.34
9.81
10.09

15.40
15.40
15.40

Daily--Mar. 20
26
27

13.16
14.82

12.36
12.97
13.08

11.53
12.21
12.18

13.25
13.88
14.12

12.68
13.39
13.63

17.50
17.50
17.50

12.99
13.64

12.77
13.34

12.34
12.92

13.66p

13.

Feb.

15.lop

36

p

14.55
14.42
15.06p

14.69p

1.a.

14.84

15.59

15.88
15.39

13.76
14.08
14.41
14.26
14.46
14.17
13 96
14.23

12.94p

NOTE: Weekly data for columns 1, 2, 3, and 5 through 10 are statement week averages of daily data.
Weekly data in column 4 are average rates set in the
auction of 6-month bills that will be issued on the Thursday folqwing the end of the statement week.
For colum 11, the weekly date is the mid-point of
the calendar week over which data are averaged.
Columns 12 and 13 are 1-day quotes for Friday and Thursday, respectively, following the end of the statement week. Column 14 Is an average of contract interest rates on commitments for conventional first mortgages with 80 percent loan-to-value ratios made
by a sample of Insured savings and loan associations on the Friday following the end of the statement week.
The FNMA auction yield is the average yield
in a bl-weekly auction for short-term forward commitments for government underwritten mortgages; beginning July 7, 1980, figures exclude graduated payment
mortgages. GCKA yields are average net yields to investors on mortgage-backed securities for immediate delivery, assuming prepayment in 12 years on pools
of 30-year FllA/VA mortgages carrying the coupon rate 50 basis points below the current FUIA/VA ceiling.

TABLE 2
1
NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES1/
(Millions of dollars, not seasonally adjusted)

Treasury

Treasury

Federal Agencies
Net Purchases 4/

-

Loupon

Net Purchases 3/

Period

Bills Net
Cange 2/

W thiln
1-year

1 - 5

5 - 10

Over 10

Total

1976
1977
1978
1979
1980

863
4,361
870
6,243
-3,052

472
517
1,184
603
912

3,025
2,833
4.188
3.456
2,138

1,048
758
1,526
523
703

642
553
1,063
454
811

5,187
4,660
7,962
5,035
4,564

4,164

118

1,101

81

51

292./
110137
100

355,1
1,156541
--

107
359
236
--

541
--

1979--Qtr. IV
1980--Qtr. 1
II
III
IV
1980--Aug.
Sept.

-2,945
3,249
-3,298
-58
-47
-37

STRICTLY CONFIDENTIAL (FR)
CLASS II - FOMC
March 30, 1981

137
--

Within
I-year

Net Change
Outright

Net

Total

Ioldings
Total 5/

RPs
6/

891
1,433
127
454
668

6,227
10,035
8,724
10,290
2,035

I - 5

5 - 10

105
--47
131
217

469
792
45
317
398

203
428
104
5
29

114
213
24
-24

1,351

-

--

--

-

--

81
410
320
--

836
2,395
1,234
100

-217
---

-398
---

-29
---

-24
---

-668
---

-2,114
6,307
-2.157
-1

362
2,373
-1,381
1,107

236
--

320
--

1,234
--

---

---

--

--

---

1,187
-128

-985
911

--

--100

---

----

---

--

----

-261
-1,100
1,360

1,267
332
-492

Over 10

4,839-

3,607
-2,892
-1,774
-2,597
2,462
-3,801

Oct.
Nov.
Dec.

-241
-1,100
1,282

100

--

--

---

1981--Jan.
Feb.

-3,764
-357

--23

---

---

--

--23

---

---

---

--

---

-3764
-32

-1,696
832

198L--Jan. 7
14
21
28

-268
-98
723
-2,477

-----

----

-----

-----

-----

-----

-----

-----

---

--

-268
-98
723
-2,477

-5,031
4,339
-8,482
3,802

Feb. 4
It
18
25

-1,738
-100
-163
--

---23
-

----

----

----

--23
--

---

----

-----

-----

----

-1,738
-100
-186
-3

3,779
67
954
-1,291

---

----

-----

--

---

--

--

..

--

--..

----

----

----

-----

209
-4
1,399
--

-1,019
459
1,892
730

tar. 4
11
18
25

209
-1,399
....

--

---

--

.2
128.8
8.7
0.7
1.0
4.6
2.5
75.6
15.3
13.8
34.7
11.8
44.5
LEVEI.--Har. 25
(Ln billions)
1/ Change from end-of period to end-of-period.
auctions.
2/ Outright transactions Id market and with foreign accounts, and redemptions (-) In bill
Excludes redemptions,
3/ Outright transactions In market and with foreign accounts, and short-term notes acquired in exchange for maturing bills.
maturity shifts, rollovers of maturing coupon issues, and direct treasury borrowing from ihe System.
Excludes redemptions and maturity shifts.
4/
Outright transactions in market and with foreign accounts only.
5/
In addition to the net purchases of securities, also rdfiects changes in System holdings of bankers' acceptances, direct Treasury borrowing from
the System and redemptions (-) of agency and I'reasury coupon issues.
6/
Includes changes In RPs (4), nmtched sale-purchase transactions (-)I and matched purchase-sale transactions (1).
7/
8/

On October 1, 1979, $668 million of maturing 2- and 4-year notes were exchanged for a like amount of short-term bills,
because the note auctions
were delayed.
On October 9 and 10, the bills were exchanged for new 2- and 4 -year notes, respectively.
aturing 2-year notes were exchanged on June 2, 1980, for special 2-day bills.
At their maturity the bills were exchanged for new 2-year notes.

TABLE 3

STRICTLY CONFIDFNTIAL (FR)
CLASS II - FOMC
March 30, 1981

SECURITY DEALER POSITIONS AND BANK POSIIONS
(Millions of dollars)

flember Bank Reserve Positions

U.S. Covt. Securities
Dealer Positionss
__utures & Forwards

Cash)

ills
7

Underwriting

ons

Coupons
lls

u

Syndicato
Corporate

'ositions
Huniclpal

Bonds

Bonds

Borrowlng at rRi
Excess
Reserves

Total

Seasonal

726
-122

2,960
628

207

2,866

93

510

3,439

177

215

5

816
0

1,644

97
150

99

19 9--11ghli
L.ou

8,091

902

138

-2,569

19d0--IlhhI,
Low

8,838
1,972

2,263
-1,682

1980--F.b.
MHr.

2,937
2,964

-212
-659

-4,873
-7,665

-1,036
-1,135

211
186

2,823

7,838

167

1,372
1,429

-5,227
-77.
3,526

-1,40/.8
-1,563
-1,880

197
178
203

2,455
1,018
379

155

4,0)08

634
798
-416

2,438
3,081
414

-1,015
-1,97h4
-1,185

204
302
256

395
658
1,311

6

-1,556
-7,068
-9,812

-1,685
-2,663
-2,751

206
498p
552p

Apr.
Mliy
June

3,724

1,080p1
-228p

July
Aug.
Sept.L.

4,581
5,108

Oct.

2,447

Nov.

3,047

Dec.

4,287

143
149
20

198L--Jaj.
Feb.

9,985
13,317

1,584
1,812

-11,976
-12,203

-2,884
-2,798

7,878
9,762
12,048

1,608
1,513
1,105
2,030

-10,987
-11,898
-11,727
-11,003

-2,837
-2,806
-2,941
-2,824

12,789
11,683
11,624
15,668

1,750
2,068
1,393
1,538

-12,176

-3,137
-2,901
-2,560
-2,676

3,681

1981--Jan. 7
14

8,823

21
28
feb.

4
11

18
25
Mar. 4
11
18
25

14,314"
14.9441,
13.662*
12,1831

-12,843
-11,697
-12,055

2.736*
,378*
2,641'

-12,436*

4,213"

-10.498*

2

-11.203*

-12.865*

-2,753A
-3,160*
-3,387*
-3,237*

Special

552
743

63
12

9
25

Adjustment

3,298
12

1,558
2,575

307

1,748
212
61

253
241

136
408

91

1,196

1,310
,0 59 p
1,690p

97p
l16 p

0
0
0

1,244
1,963p

554p
183p

1,395p

120p

48p

1,226p
I,11 6 p

66

4p
741 p
507p
400p
2281)
1701p

298p
-1651
697p
219p
3430
10
7p

2

66

14 8

p

0

1,117p
1,332p

112p
105p

0
0

1,419p
1,793p

123p

137p

0

1,201p
l,113 p
1,145p
1,713p

125p
131p
154 p
160p

0
0

1,303p

1,299p
76 8p
774p
888p

176p
185p
193p
20 0p

0
0
0
0
0
00
0

1,574p

1,005p
1,227p
1,082p
1,6 56p
1,07 6 p
98 2 p
991p
55 3
1,

1.

p

1 23

p

583p
581p
688p

NOfr:
(.overnr'Lnt securities dealer cjhli position' consist of securities already delivered, coninltments to buy (sell) securities on an outright basi
for incrtdl.ite delivery (5 business days or less), and certain "when-issucd" securities for delayed delivery (more than 5 business days).
Futures an
forward positions Includa all other comnitLments Involving delayed delivery; futures contracts are arranged on organized exchanges.
Undbr rlting
syndicate poitions
consist of issues In syndicate, excluding trading positions.
UWetkly data are daily avetages for ntatement weeks, except for corpornLe and municipal issues in syndicate, which are Friday figures.
Honthly
averages for e/cess reserves and borrowing are welglitrd averages of statement week figures.
Honthly data for dealer futures and forwards are endof-month figures for 1980.
* Strictly confidential