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I x DIVISION O F I N T E R N A T I O N A L F I N A N C E BOARD OF GOVERNORS F E D E R A L R E S E R V E SYSTEM H. 13 No. v7,vXlVl I > January 11 * 1963 \ Qv . ' (.CAPITAL MARKET DEVELOPMENTS ABROAD I . -piited Kingdom *• ^-Iler-Nine Charts on Financial Markets Abroad I, United Kingdom: Money and C a p i t a l Markets During the Fourth Quarter 1962 The s u b s t a n t i a l d e c l i n e s i n y i e l d s i n B r i t i s h money and c a p i t a l markets which occurred during the t h i r d q u a r t e r came to an end during the f i n a l t h r e e months of 1962 0 For example, the 11 per cent r i s e i n the index of Government bond p r i c e s i n the t h i r d q u a r t e r cane t o an end i n e a r l y October and year-end p r i c e s were a t about the e a r l y October l e v e l , Only"in e a r l y 1963 a f t e r Bank r a t e had been cut from U-l/2 to Ij. per cent on January 3 d i d Treasury b i l l and bond y i e l d s move toward somewhat lower l e v e l s , This s t a b i l i t y i n market y i e l d s was maintained even though the a u t h o r i t i e s took steps during the f o u r t h q u a r t e r t o augment c r e d i t a v a i l a b i l i t i e s and to expand demand i n the f a c e of a d e t e r i o r a t i n g business s i t u a t i o n , Special Deposits r e l e a s e d to the banks i n e a r l y October were used by them not t o expand t h e i r loans t o the p r i v a t e s e c t o r b u t to acquire Treasury s e c u r i t i e s s the banks made s u b s t a n t i a l a d d i t i o n s t o t h e i r bond holdings i n October and to t h e i r money-market a s s e t s ( c a l l loans and Treasury b i l l s ) i n December# (See Table 2 , ) In l a t e October s t h e r e was a general r i s e i n y i e l d s i n London f i n a n c i a l markets during t h e Cuban c r i s i s and y i e l d s d r i f t e d down slowly during l a t e November and December0 : The January 3 cut i n Bank r a t e was followed by advances i n the p r i c e s of Treasury b i l l s , spot s t e r l i n g and i n d u s t r i a l s h a r e s . Recent changes i n key f i n a n c i a l i n d i c a t o r s have been: 1 9 6 2 Octo 26 Dec, 28 3,^6 §.70 J*78 5*91 3.66 5.75 3*50 5.68 3,50 5.70 Spot pound (U.S. c e n t s ) 280,11 280,01; 280,26 280oli2 280,61 I n d u s t r i a l shares (Index) 269.8 270,7 281w2 288,7 Septo 28 Treasury b i l l s ( p e r c e n t ) War Loan ( p e r c e n t ) a / January 8 . OFFICIAL USE ONLY DECONTROLLED AFTER SIX MONTHS 1 9 6 3 Jan, k Jan, 9 a/29U»9 OFFICIAL USE ONLY The advafiues i n the s p c t pound s i n c e l a t e November (see Table 9) have come on the h e e l s oi u n s a t i s f a c t o r y e x p o r t f i g u r e s f o r November and of f u r t h e r g a i n s i n o f f i c i a l . r e s e r v e s i n December <> These .developments- were s i m i l a r to t r e n d s i n the t h i r d - q u a r t e r as r e f l e c t e d i n t h e s e a s o n a l l y - a d j u s t e d b a l a n ; e of payments f i g u r e s : the. goods and s e r v i c e account showed a d e f i c i t of £U5 m i l l i o n o the f i r s t since the f o u r t h q u a r t e r of 1961c but t h e o v e r a l l balance ' had a £18 m i l l i o n - s u r p l u s ' l a r g e l y because of a £128 m i l l i o n i n f l o w i n the e r r o r and omissions which i s the ugh t t o have been l a r g e l y an i n f l o w cf u n r e corded p r i v a t e capita*: 0 At the time Bank r a t e was reduced, the Bank of England announced t h a t i t would r e s e r v e the r i g h t to charge more t h a n Bank r a t e on penal l e a n s t o the discount- market, This t e c h n i c a l i n n o v a t i o n , a r e i n t r c d u c t i o n of an arrangement i n e f f e c t i n the 1920 s s 5 i s designed t o provide the Bank with an a d d i t i o n a l instrument when i t seeks t c maintain t h e Treasury b i l l r a t e i n tea f a c e of downward market p r e s s u r e s ; i n p a r t i c u l a r s the new measure may h e l p keep t h e b i l l r a t e c l o s e r t c Bank r a t e than has been t h e case a t time? during the p a s t few y e a r s , At present<, the d i s c o u n t houses can o b t a i n accommodation a t the Bank by redisccunt-ing b i l l s a t Bank r a t e but f o r a 21-day minimum average l i f e cf the b i l l s or by d i r e c t advances a g a i n s t s e c u r i t i e s u s u a l l y f o r a 7-day p e r i o d . By r a i s i n g t h e r a t e on advances, the Bank could make more c o s t l y what has been the l e a s t c o s t l y means of temporary accommodation a v a i l a b l e t o the d i s c o u n t houses-.Money marksto The l e v e l of s h o r t - t e r m r a t e s a t the end of the f o u r t h q u a r t e r 1 9 ^ T l f a ^ c l c s e to what i t had been i n e a r l y October„ (See Table 9 and Chart 2 . ) The Treasury b i l l r a t e « which had been f a l l i n g s t e a d i l y f o r the seven months> a b r u p t l y r o s e on October 19» On t h a t date* t h e di.secunt nouses lowered t h e i r bid at- the tender 0 The post—tender market r a t e r o s e from 3<>53 per c e n t of the previous week to 3<>69 per c e n t , but g r a d u a l l y f e l l from a November 2 peak through the remainder cf the month„ By mid"December the r a t e had dropped to 3 o 3 per cent i n a n t i c i p a t i o n of a cut i n Bank r a t e <> Therefore«, when the Bank r a t e was reduced f rom L=l/2 t o h p e r c e n t on January 3* the a f t e r - t e n d e r r a t e on January u was only 16 b a s i s p o i n t s below the market r a t e of previous Friday 0 During and a f t e r t h e Cuban c r i s i s c whei t h e b i l l r a t e was up-, t h e forward d i s c o u n t narrcwecu c r e a t i n g covered a r b i t r a g e o p p o r t u n i t i e s i n fa-,or of the UoKo Treasury b i l l . (See Table 9») Some funds moved t o London from the U.S. e a r l y i n November. Rates on E u r c - d o l l a r degc si t s i n London were r e l a t i v e l y high throughout the e n t i r e t h i r d q u a r t e r ^ and d i d not f a l l u n t i l a f t e r the New Year,, (See Table 1 . ) During the Cuban c r i s i s „ r a t e s moved up s h a r p l y from i / u to l/:> percentage p o i n t s „ Some funds which would o r d i n a r i l y have been loacsd l:r. t h i s market were s h i f t e d i n t o gold or i n t o Swiss f r a n c s » S p e c u l a t o r s may also have borrowed E u r o - d o l l a r s to c o n v e r t i n t o gold or Swiss f r a n c s , A f t e r the Cuban c r i s i s had passed« r a t e s moved up i n l a t e November once agaic. on borrowing by I t a l i a n banks which, under new l e g i s l a t i o n 5 were allowed to OFFICIAL USE ONLY = 3 " OFFICIAL IBE ONLY s h i f t i n t o l i r a a s s e t s Euro-dollar borrowings t o improve t h e i r domestic l i q u i d i t y o In a d d i t i o n , expected year-end s t r i n g e n c i e s i n the market a f f e c t e d r a t e l e v e l s ; Continental banks r e p a t r i a t e d funds from the market in December f o r window-dressing purposes. A f t e r January f i r s t , the r a t e s moved down a f t e r the money was r e t u r n e d 0 Table lo ' I n t e r e s t Rates en U0S0 D o l l a r Deposits i n London (per cent per annum) * ~ Oct. 5 Call 7-day 30-day 90-day 180-day 3.50 3.# 3.75 3.9k U.19 1 9 6 2 Nov* 1 Novo 30 3.75 3.75 3.37 3.50 U.31 L.Wi U.12 a.25 Dec. 31 1963 Jan 0 I : 3.# 3.50 ho^O U.oo U.19 3.37 3.37 3.62 3.75 3.9U In the l o c a l a u t h o r i t i e s funds market, i n t e r e s t r a t e s eased momentarily i n October but moved up sharply a t year-end when European funds were r e p a t r i a t e d , , (See Table 9») During and a f t e r the Cuban c r i s i s , some f o r e i g n funds were s h i f t e d i n t o Euro=dollars, mainly because of the h i g h e r y i e l d s o At the end of December, the r a t e of three-months d e p o s i t s with l o c a l a u t h o r i t i e s rose t o lu87 per c e n t , but was back to ho2$ per cent i n e a r l y January 0 Gilt-edged marksto The main development i n t h e g i l t - e d g e d market during the f o u r t h q u a r t e r of 1962 was the i n t e r r u p t i o n of the steady upward movement i n the p r i c e s of Government bonds i n the preceding q u a r t e r „ (See Table 10 and Chart 6 0 ) Between June 28 and .October h s the Government s e c u r i t i e s p r i c e index rose by 11 per c e n t , but bond p r i c e s then l e v e l e d o f f „ During the c r i t i c a l days of the Cuban c r i s i s s from October 22 through 2ks> a general wave of s e l l i n g took p l a c e , but p r i c e s g r a d u a l l y recovered i n the following week and s d e s p i t e a sluggish market, also during November. Stock marketo Stock p r i c e s were f a i r l y s t a b l e i n October, except f o r a 5 per cent decline during the Cuban c r i s i s * (See Table 10 and Chart ?<>) By the end of October, p r i c e s had recovered and they rose a f u r t h e r 6-1/2 per cent between November 6 and 26 0 The announcement of the new d e p r e c i a t i o n allowances f o r business and the r a l l y on Wall S t r e e t c o n t r i b u t e d t o these-gain?o A f t e r November 26, stock p r i c e s began to d r i f t downwards again and on December 31 were U-l/2 per cent below the November 27 h i g h . The F i n a n c i a l Times (December 18, 1962, p» 1) a t t r i b u t e d the weakness „ 0 more /fco7 the lack of support than any p r e s s u r e t o s e l l . " However, p r i c e s moved s h a r p l y upward i n e a r l y January a f t e r the Bank r a t e was cut» London c l e a r i n g banks„ The s p e c i a l d e p o s i t s with the" Bank of England which were r e l e a s e d in October and again i n December were used mainly t o provide a d d i t i o n a l finance, to the p u b l i c s e c t o r during the f o u r t h q u a r t e r . (See Table 2 . ) OFFICIAL USE ONLY OFFICIAL USE ONLY These r e l e a s e s of r e s e r v e balances and the removal of r e s t r i c t i o n s on bank lending t c f i n a n c e p e r s o n a l consumption and r e a l e s t a t e development had l i t t l e e f f e c t on lending to the p r i v a t e s e c t o r i n the q u a r t e r . There was a jump i n advances i n October, but t h i s was because s according t o The Economist (October 2'7S 1962) » « t h e r e were a number of proposals on the banks • books merely w a i t i n g f o r the removal of the r e s t r a i n t on p r o p e r t y s p e r s o n a l . and h i r e purchase l e n d i n g , " In the two months ending December 12s advances t o the p r i v a t e s e c t o r i n c r e a s e d try only £22 million,, The q u a r t e r l y summary of B r i t i s h bank loans ending i n mid -November show a d e c l i n e i n i n d u s t r y l e a n s . / Table 2, London Clearing Banksi Net Deposits and Selected A s s e t s 3 1962 (In m i l l i o n s of pounds) Outstanding December 12 JulySept 0 Changes Oct.Dec, Oct. +77 +106 + 86 -12 - 32 6,575 Loans t o Public S e c t o r ; Government s e c u r i t i e s Treasury b i l l s Cash C a l l loans Loans t o Nationalized Industries +96 IB - 3 -18 +223 • T"HI + 12 + 21 + 9lt +126 T"S3 ~ 25 + 22 + U3 + 5 - 9 +17 -11 ™ 9 +103 i 7 + 26 + 10 + 60 3,690 i^oC 986 6Ui 7% 419 + 15 + + 7 x .5 m Loans t o P r i v a t e Sector° Advances Commerical b i l l s Other investments +" 8 T-B + 56 + 39 T%2 - 3 - 3 +12 -15 + 20 10 •» 10 3,816 3:43% 268 112 Net Deposits — = 8 — — 3 Nov. De:. S p e c i a l Deposits with Bank of England + l -112 - 75 + 2 -39 Reserve r a t i o s (end of period)s Liquid a s s e t s Cash Special deposits 33.7 8.2 2.0 3k.O 8.2 0.5 33o5 8.3 1.0 33.3 8.2 1.0 31.0 8.2 0.5 38 I n s t a l l m e n t c r e d i t . I n s t a l l m e n t c r e d i t outstanding declined by £3 m i l l i o n i n October, r e f l e c t i n g t h e ^ r e d u c t i o n i n r e t a i l s a l e s during the month„ New c r e d i t extended by f i n a n c e houses expanded as i s normal f o r Octobero b u t the r i s e i n c r e d i t s extended by household goods shops was somewhat-less than was t o be expected f o r t h e autumn& The ^card of Trade s a i d t h a t t h i s i n d i c a t e s some f u r t h e r l o s s i n impetus i n the stimulus t o s a l e s a f f o r d e d by the June 5th r e d u c t i o n i n minimum down-payment requirements f o r a wide range of a p p l i a n c e s 0 I n s t a l l m e n t c r e d i t outstanding has remained p r a c t i c a l l y unchanged s i n c e the end of the f i r s t q u a r t e r of 1962<, (See T a b l e d „ ) OFFICIAL USE ONLY ° 5 - OFFICIAL USE ONLY Table 3» Shops Finance houses Total United Kingdom: Changes i n Hire Purchase C r e d i t ( i n m i l l i o n s of pounds) C h a n g e s 1 9 6 2 Outstanding Jan, JulyOctober Mar, Sept, Augo Sept o. Oct, 1962 + 2 T T + 3• t i t -13 ~30H -26 ^83 - 3 - 2 -39 .887 •- 3 Balance of payments 0 B r i t a i n ' s s e a s o n a l l y - a d j u s t e d payments balance moved i n t o d e f i c i t i n t h e t h i r d q u a r t e r f o r the f i r s t t i m e - s i n c e the f o u r t h q u a r t e r of 1961, However s about t w o - t h i r d s of the d e f i c i t was due t o seasonal i n f l u e n c e s , (See Table U») D e s p i t e a £U5 m i l l i o n d e f i c i t on goods and s e r v i c e s a c c o u n t , t h e r e was an o v e r a l l balance of payments s u r p l u s of £18 m i l l i o n during the q u a r t e r s r e f l e c t i n g an unexplained c r e d i t ( e r r o r s and omissions) of £128 m i l l i o n , the bulk of which i s thought t o have been unrecorded n e t i n f l o w s of p r i v a t e c a p i t a l . N o n e t h e l e s s , r e s e r v e s d e c l i n e d during t h e q u a r t e r because f o r e i g n e r s reduced t h e i r s t e r l i n g h o l d i n g s and because B r i t a i n r e p a i d t h e balance of t h e August 1961 drawing from the IMF. Even though B r i t a i n has enjoyed balance of payments 1 s u r p l u s e s s i n c e the t h i r d q u a r t e r of 1961, the l e v e l of r e s e r v e s a t t h e end of 1962 i s s t i l l £152 m i l l i o n below t h a t of e n d - I 9 6 0 . Table U» United Kingdom Balance of Payments ~ " ( i n m i l l i o n s of pounds) 9 61 Balance of Payments: A) Goods, s e r v i c e s , and t r a n s f e r payments , s e a s o n a l l y a d j u s t e d Exports, f » o , b . Imports, f 0 o , b , Trade balance Services and t r a n s f e r payments Total, seasonally adjusted Seasonal i n f l u e n c e s Total B) Long-term c a p i t a l C) P r i v a t e s h o r t - t e r m c a p i t a l D) Net e r r o r s and omissions Surplus or d e f i c i t (=) Financed by: A) E x t r a o r d i n a r y a i d B) S t e r l i n g l i a b i l i t i e s t o foreign o f f i c i a l C) Reserve movements a IMF p o s i t i o n Gold and f o r e i g n exchange (increase -) Total Total financing JulySept- 1,931 -2cOU8 - 117 30 JulySept 0 8 18 960 -985 --§5 3U 9 j a 20 19 90 1,010 -1.003 7 30 37 39 76 - 60 21 39 -528 hi 50 9h 223 • •. 1 36 - us - 53 -12 128 . 18 368 -278 10 3h - 86 U8 -52 2? -T55 - 72 -h35 ^ 962 Apr,June Jan, — Mar0 1,932 -1,958 26 36 10 - 27 1,006 -1^039 33 20 - 13 - 15 #9 - 89 -91 -195 165 -195 T5E = 5o ~ U8 %3? 7 229 -~3% - 18 528 OFFICIAL USE ONLY -223 ' 36 OFFICIAL USE ONLY Trade balance 0 B r i t i s h exports i n the p a s t t h r e e months have f a i l e d to r i s e above the l e v e l reached during the second q u a r t e r . (See Table 5») The September-November monthly average ( s e a s o n a l l y a d j u s t e d ) i s only £2 m i l l i o n above the April-June monthly average e Table United Kingdom- Seasonally Adjusted Foreign Trade Tmo~nthIy5 cr"monthly averages,, i n m i l l i o n s of pounds) mr, _ Apr •June JulySept e Septo = Nov. Sept. Oct. Nov. Imports c oi of 9 Exports f»o»b. Re-exports f.Oob. -367 306 12 "36 9 3i9 1L -385 320 13 -381 321 13 -378 325 12 -393 336 •13 -37S 301+ 15 Trade balance - u9 - 36 " 52 . - hi - la - 1th. - 56 Foreign exchange market„ S t e r l i n g f l u c t u a t e d within a narrow range throughout the f o u r t h quarter of 1962. (See Table 9 and Charts 8 and 9°) The spot r a t e was l i t t l e a f f e c t e d by the Cuban crisis«, dropping from 280,22 U.S. cents per pou^d on October 22 to 280»01 cents on October 21.. The r a t e quickly recovered during the following week. During the Cuban c r i s i s , , th^ demand f o r forward s t e r l i n g increased,, reducing the forward discount fx cm 0o5U per cent on October 19 to a low of 0,2? per c e n t on October 2b ° This mads possible some covered a r b i t r a g e movements of funds from the U„S0 , The f•:rward discount remained low 5 i n r e l a t i o n to the U0K,-U0S0 Treasury b i l l interestd i f f e r e n t i a l s s providing an incentive to move funds t o London i n the e a r l y p a r t of November. Throughout- November and December9 the spot r a t e remained f i r m , r i s i n g to 280,iil cents on December lU and f a l l i n g to 280.26 cents on December 28<, as some f o r e i g n banks r e p a t r i a t e d funds for window-dressing a* the end of t h e y e a r . The spot r a t e rose to above 280oU0 cents during t h e firs' 1 week of January 0 S e c u r i t y s t e r l i n g s which had remained September and e a r l y October 5 declined t o 278,88 (See Table 6 below,) In November« the s e c u r i t y climbed u n t i l i t reached par- where i t remained then 5 i t has held steady a t 279,88 c e n t s , steady a t 279»88 cents during cents during the Cuban c r i s i s „ . s t e r l i n g r a t e gradually through December 26 „ Since Table 6 . S e c u r i t y S t e r l i n g Rate ( In UoSo cents^per^poundj 5 11 19 23 26 279.88 279.88 279.63 279.38 - 2:5.88 November 2 9 1,6 23 30 279,25 279.38 279.50 279.75 280.00 OFFICIAL USE ONLY December January 7 Ik 21 28 1; 280.00 280.00 280,00 27.9.88 279.88 OFFICIAL USE ONLY - 7 - Bullion market* The London gold market was q u i e t from October through December5 except f o r the week of the Cuban c r i s i s . Very heavy purchases of gold were made between the c r i t i c a l days of October 22 and 2U. The F i n a n c i a l Times (November 3, 1962) e s t i m a t e s turnover i n t h e market t o have been roughly $60 m i l l i o n „ S u b s t a n t i a l o f f i c i a l support of the market was reported on those days» Demand subsided t h e r e a f t e r and the gold f i x i n g p r i c e declined s t e a d i l y during November and December. (See Table ?•) On January 9 s the f i x i n g p r i c e f e l l t o $35<>055 the lowest p r i c e since December 28 9 1959 ° Some downward p r e s s u r e on t h e p r i c e of gold was exerted l a t e i n December by s a l e s of Russian g o l d . Table 7 . October 5 11 19 2k 26 United Kingdomg Fixing Price f o r Gold Bullion (In UoSo .dollars per f i n e ounce) ' November 35.130 35.137 35.138 35.187 35-177 2 9 16 23 30 35.123 35.100 35.092 35.087 35.083 December January 7 1U 21 28 h 35.078 35.071 35.083 35.069 35.063 Europe and B r i t i s h Commonwealth Section 0 II. Chart Chart Chart Chart Chart Chart Chart Chart Nine Charts on F i n a n c i a l Markets Abroad I n t e r e s t A r b i t r a g e , United States/Canada I n t e r e s t A r b i t r a g e s New York/London I n t e r e s t Arbitrage f o r German Commercial Banks I n t e r e s t Arbitrage s Frankfurt/London Short-term I n t e r e s t Rates Long-term Bond Yields I n d u s t r i a l Stock Indices Spot Exchange Rates — Major Currencies Against U,S. D o l l a r Chart 9 - 3-month Forward Exchange Rates 1 2 3 U 5 6 7 8 - OFFICIAL USE ONLY Table 9. United Kingdom: Treasury B i l l Yields and Exchange Rates Spot pound (U.S. cents) London deposit r a t e s U.S. Local dollar authority (3-mo.) -o.L. 281.71 280.0q 4,13 3,44 4.87 4,19 -fO.26 40,22 +o,ik +0.41 +0.74 +0.54 ^0.52 +0.h6 +0.28 +0.33 '0.35 +0.1? 40.03 +0.25 40r:6 280.11 280.10 280.21. 280,24 280,0% 280.1c 28C.15 cOO.l; 280.35 280.34 28v.3: 280.4: 28C.3S 280.26 280.&; 3.81 3.6: 3.9: 3.91 4,13 4.:9 ho& 4,Of 4 OA.3 4.56 4.31 4.25 4.19 4.31 4.31 4.31 4.3: 4,31 4.31 4.53 4,53 4.69 a.e? 3=-mo. Treasury b i l l 1 a r b i t r a g e calculation U.S. D i f f e r U.K. In favor 3-mo. pound if ence U.K. b i l l 1 9 6 2 - High Low 3.?8 4.25 X.oO 2.:3 -0.3:. "1. "0.56 -0.5: •=0,6 -0.54 "0.31 -0.4: 0.8: 28 ^ 2«74 3.# O.-? 2.76 3.55 5 0.76 11 , 3.53 2.74 0.95 19 3.69 1.05 26 2.73 3.78 Nov. 2.83 0*95 2 3.78 2.80 0.9; 3.72 9 0.89 16 2.83 '3.72 0.82 3.66 2.8k 23 2.86 o, r 30 3.63 0.'2 2.6k Dec, 7 3.# 0.68 2.85 lh .3,53 0.6a 2.89 21 , 3.53 0.68 3=66 28 2.98 1S63 Jan, . h . , 0.60 1,50 a_/ Market quotation for Friday. Septo Oct. .43 -0.5k =0.61 ^ Table ^0C United Kingdom; U-l/2% 196U 1962 - High Low 5.85 3c 90 Sept. Oct. 3.98 4,0.3 LclO Nov. Deco % 27 Jb 11 18 25 1 8 15 22 29 6 4.-:6 4." 1 L.iv L.:: L09 AicO; 4.01 6 . 3 5 60 • : ,00 5.L5 ; , 8 o ,98 4c 8 ; 5.80 5, % 5.75 5 c 65 f,4 5 . 8 0 5 c- 0 0 5.?o 5, 4. 4< 5c . 0 5c 5, 5, - 5 . 5c-5 5,80 5.69 5.9.. 5.8: 5o " 6 5,8: 5.83 5,84 6.5: 5.5i 5 • 5i 5.56 5.61 5.51 5.7? 5.70 5.63 5.75 5.71 5.70 Share yield hf 7 7 Yield gap °! 5/8 5.5-i 5.f'5 5/5 5c 5.^4 5.4f 5.3, 5..; T So. lit y . Share prices IJ 309/ 5.:8 5 6 ) ' 2-:A n m Jan. S . a / Financial Times. 15/ Difference between y i e l d on 2-1/2 per cent Consols and share y i e l d . h Selected Capital Market Yields U.K. Government bond y i e l d s 3 5" .• 3-1/2% 2-1/2% 1965-75 -00?".. War Loan Consols 6 4.06 4.3Lo, n 0< ,' J,3 . .1 Oc: 0 6 45 0, 44 o c 4 3 0: -C Ht ^69.8 f79r C-io8 276.0 270c"' 2 7 6 . ; ^85.3 293.9 295.2 1 9 5 , 6 m - j :5s- INTEREST ARBITRAGE, UNITED S T A T E S / C A N A D A Thursday figures THREE-MONTH TREASURY BILL R A T E S RATE DIFFERENTIAL A N D F O R W A R D CANADIAN DOLLAR A / RATE DIFFERENTIAL W I T H FORWARD EXCHANGE COVER NET INCENTIVE IN FAVOR OF CANADA + LJ. 1959 1960 1961 LI. L 1. .L.1..L1. D T 1962 INTEREST ARBITRAGE, NEW YORK/LONDON _Fjrijd a y f j g u r e t 3-MONTH Per cent per annum TREASURY BILL R A T E S 4 RATE D I F F E R E N T I A L A N D | 3 - M O NTH F O R W A R D S T E R L I N G -r- RATE D I F F E R E N T I A L WITH " F O R W A R D EXCHANGE COVER 1959 1960 1961 1962 INTEREST Friday ARBITRAGE FOR GERMAN COMMERCIAL BANKS figures 3-MONTH P TREASURY - EURO-DOLLAR BILLS, DEPOSIT INTERBANK LENDING RATE K RATE RATE DIFFERENTIAL AND DIFFERENTIAL WITH AND RATES FORWARD FORWARD DEUTSCHE EXCHANGE A. MARK COVER IN FAVOR OF FRANKFURT ( + ) 19 60 Note: 1961 Special forward role available lo German commercial bonki 1962 INTEREST ARBITRAGE, FRANKFURT / I O W H O N Friday f i g u m ~3-M0_NTH TREASURY _J-NlERBANK LENDING ' t- BILLS AND RATES —i/A UNITED KINGDOM TREASURY BILLS \ l \ GERMAN INTERBANK I j| V V - v LOAN RATE J r.ERMAN TREASURY 6IUS I RATE D I F F E R E N T I A L A N D 3-MONTH FORWARD STERLING I GERMAN TREASURY BILLS SPREAD IN FAVOR Of UNITED KINGDOM BILLS OVERS LOAN RATE FORWARD RATE Discount 1 RATE , DIFFERENTIAL i i WITH r - FORWARD NET INCENTIVE OF UNITED KINGDOM OVER: -t EXCHANGE T 1 COVER GERMAN TREASURY BILLS GERMAN INTERBANK LOAN RATE: S H O R T - T E R M INTEREST RATES * A ~! / 1 CANADA f 1- 1. J .1-111 1 1962 3 monlh treasury bill role* lor all countries except Japan (li month interbank ^deposit rate) and Switzerland (j month deposit role) "j" 3 month rote lor U 5 dollar depunti in London 17 LONG-TERM BOND YIELDS ' LLLLL111J. 1J. 1958 1959 1960 1961 1962 V- INDUSTRIAL STOCK INDICES' 1958 = 100 Ratio stale 450 SPOT EXCHANGE . ™ . : RATES ' - MAJOR ' CURRENCIES AGAINST U.S. DOLLAR Per co_nA / ~ | dolla Abov e par 3-MONTH AGAINST FORWARD EXCHANGE RATES U. S : D O L L A R S AG A I N S ! POUND STERLING - L O N D O N U.S. DOllAR AGAINST POUND STERLING - LONDON FRENCH FRANC J j w
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