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I
DiVIIION o r INTERNATIONAL F I N A N C I
H. 13
No. 110
\
/
^
B O A R D OF OOVERNOItS
^
\
June 19, 1963
\CAPITAL MAgKEf DEVELOPMENTS ABROAD
i , ^ l J n i t e d Kingdom
I I . Nine C h a r t s on F i n a n c i a l Markets Abroad
I.
United Kingdoms
Money and C a p i t a l Markets i n May 1963
Government s e c u r i t i e s p r i c e s r o s e modestly and i n d u s t r i a l common
s t o c k s f l u c t u a t e d e r r a t i c a l l y i n London f i n a n c i a l markets during May, b u t
both bond and e q u i t y p r i c e s broke s h a r p l y d u r i n g t h e week of June 10 i n
r e a c t i o n t o the Profumo a f f a i r . On t h e e x t e r n a l s i d e , o f f i c i a l r e s e r v e s
r o s e by L29 m i l l i o n i n May. The spot pound declinied about one U.S. c e n t
i n mid-May and t h e n f l u c t u a t e d narrowly around t h e $2.80 p a r i t y . The
d i s c o u n t on t h e forward pound narrowed i n l a t e May.
During May and e a r l y June, t h e r e was a c o n t i n u i n g b u t modest r i s e
i n bond p r i c e s ( f a l l i n bond y i e l d s ; over t h e e n t i r e range of Treasury
s e c u r i t i e s . (See Table 1) I n t h e s t o c k m a r k e t - p r i c e s moved only n a r r o w l y .
On June 10, however, t h e stock index dropped by seven p o i n t s , t h e s h a r p e s t
d e c l i n e experienced s i n c e t h e Cuban c r i s i s and bond y i e l d s r o s e by between
7 and 13 b a s i s p o i n t s by mid-June. A p p l i c a t i o n s f o r Treasury b i l l s a t t h e
June lU a u c t i o n were more t h a n double the v a l u e of b i l l s on o f f e r .
Table 1 .
United Kingdoms S e l e c t e d S e c u r i t i e s Y i e l d s , May-June
I
Change i n weeks ending
May
June
H
22
30
r
13
Yields
June 13, 1963
Security price i n d i c e s ^
I n d u s t r i a l common s t o c k s
Government s e c u r i t i e s
+
-3*7
«30
+
3®6
+ .67
-3.1
.06
—
—
-7«3
+ .62 + .llj. - 1 . 0 2
• .01
- .02
- .08 - . 0 1
— .08 - . 0 1
- .08 - .03 + .10
So 13
- .02
- .03
- 0O3 - .03
- .10 + .Oii
- .05 - .05 + .07
— .08 —. 0 1 + .13
5.32
+
303=7
85<>9U
Government s e c u r i t i e s
yields b/
Treasury b i l l s ( t e n d e r )
3% Savings Bonds, 1965-75
3-1/2% Funding S t o c k ,
1999-2001*
2-1/2% Consuls
—
a / The F i n a n c i a l Times. Changes a r e a b s o l u t e changes.
F / Per c e n t p e r annum. Changes a r e a b s o l u t e changes.
OFFICIAL USE ONLY
(DECONTROLLED AFTER SIX MONTHS)
—
.05,
——
3.68
5.5k
OFFICIAL USE ONLY
- 2 -
C r e d i t a v a i l a b i l i t i e s t o t h e p r i v a t e s e c t o r have continued t o grow
s i n c e t h e e a r l y months of t h i s year3 b u t t h e r a t e of c r e d i t expansion has been
r e s t r a i n e d , d e s p i t e o f f i c i a l e f f o r t s t o a c c e l e r a t e b u s i n e s s r e c o v e r y . New
i n s t a l l m e n t c r e d i t extended by f i n a n c e companies r o s e i n March and A p r i l
mainly a s a r e s u l t of booming automobile s a l e s on t h e home m a r k e t . Bank
advances to t h e p r i v a t e s e c t o r climbed from mid-March t o mid-May6 S e a s o n a l l y a d j u s t e d e s t i m a t e s of l o a n s t o t h e p r i v a t e s e c t o r ( a v a i l a b l e t h i s month f o r
t h e f i r s t time) show a s t e a d y expansion a t a monthly r a t e of
t o £JU5 m i l l i o n
s i n c e t h e beginning of t h i s y e a r . D e s p i t e e a s i e r t e n d e n c i e s i n i n t e r e s t r a t e s
and t h e c o n t i n u i n g expansion i n bank l o a n s , t h e c l e a r i n g banks continue t o
f a c e l i q u i d i t y p r e s s u r e s . The r a t i o of l i q u i d a s s e t s t o d e p o s i t s was only
30.7 per c e n t i n mid-May compared with 30.5 p e r cent i n both mid-March and midApril „
The s p o t pound remained c l o s e t o the $2.80 p a r v a l u e during most
of t h e p e r i o d under r e v i e w . (See Table 9 and Chart 8 ) . The i n c r e a s e i n t h e
F e d e r a l Reserve-Bank of England swap from $50 t o $500 m i l l i o n , announced on
May.30, c o n t r i b u t e d t o a drop i n t h e forward d i s c o u n t on May 31 and June ?•
(See Table 9 ) .
C o n s i d e r a b l e a c t i v i t y was r e p o r t e d i n U.S. d o l l a r t r a n s a c t i o n s
i n London. I n e a r l y June i t was announced t h a t a s y n d i c a t e of European
banks would o f f e r $15 m i l l i o n of 5 - 1 / 2 p e r c e n t b e a r e r bonds i n London
i n e a r l y July t o f i n a n c e r o a d - b u i l d i n g i n I t a l y . This new o f f e r i n g , t h e
f i r s t f o r e i g n i n d u s t r i a l loan f l o a t e d i n London s i n c e 1939, f o l l o w s a
p r i v a t e l y - p l a c e d $20 m i l l i o n Belgian Government d o l l a r l o a n announced a
month e a r l i e r . (See " C a p i t a l Market Developments Abroad," May 22, 1963).
Over t h e p a s t s i x y e a r s , c o n t i n e n t a l banks have been o f f e r i n g U.S. d o l l a r
loans t o European i n v e s t o r s beginning i n 1957 with a $20 m i l l i o n P e t r o f i n a
i s s u e (which had an exchange o p t i o n i n t o D-marks, g u i l d e r s and Swiss and
Belgian f r a n c s ) . According t o t h e S t a t i s t , t h e s e loans have t o t a l l e d around
$170 m i l l i o n , some w i t h and some without a D-mark option?and a l l n e g o t i a b l e
i n Brussels5 Belgian p r i v a t e i n v e s t o r s a r e r e p o r t e d t o have been t h e main
s u b s c r i b e r s t o t h e s e o f f e r i n g s . (May 2h, 1963, p . 577*)
The two r e c e n t o f f e r i n g s i n London of U.S. d o l l a r bonds r e f l e c t
e f f o r t s being made i n t h e United Kingdom t o extend the i n t e r n a t i o n a l banking
a c t i v i t i e s of London f i r m s . E a r l i e r s t e p s taken have been r e p o r t e d i n r e c e n t
i s s u e s i n t h i s s e r i e s . I n June, t h e Stock Exchange Council has proposed t h a t
b r o k e r s reduce t h e commission from 3/h t o 1/2 p e r c e n t on c e r t a i n t y p e s of
i s s u e s which f o r e i g n e r s might be i n t e r e s t e d i n f l o a t i n g i n London.
London market r a t e s on 3-month U.S. d o l l a r d e p o s i t s climbed from
3.66^per c e n t i n l a t e A p r i l t o 3 . 9 1 p e r c e n t i n e a r l y June. By mid-June,
t h e r a t e had eased t o 3»8U p e r c e n t . (See Table 9 ) . The s t r e n g t h e n e d Eurod o l l a r market i n May r e f l e c t e d t h e impact of developments i n s e v e r a l European
f i n a n c i a l c e n t e r s ; t i g h t money-market c o n d i t i o n s i n Germany, t h e Netherlands
and France ( E u r o - d o l l a r s being a cheap and r e a d i l y a v a i l a b l e s o u r c e of temporary
c r e d i t ) 5 mid-year window-dressing by p r i v a t e European banks5 and added r e c o u r s e
by I t a l i a n banks t o d o l l a r f u n d s ( t o o f f s e t t h e heavy c a p i t a l o u t f l o w from
I t a l y caused by p o l i t i c a l u n c e r t a i n t y ) „
OFFICIAL USE ONLY
OFFICIAL USE ONLY
-3-
Money market. The Treasury b i l l r a t e f e l l from 3.73 t o 3.65
p e r c e n t a t t h e May 1? a u c t i o n , as t h e discount market attempted t o
r e s t o r e i t s d e p l e t e d stock of b i l l s following t h r e e weeks when i t s a l l o t m e n t
averaged only 19 p e r c e n t of t h e b i l l s o f f e r e d . (See Table 2 . ) More a c t i v e
bidding by t h e market on May 2k and 31 kept t h e b i l l y i e l d lower d e s p i t e
p r e s s u r e s from t h e Bank of Bigland ( i . e . — f o r c i n g t h e market t o borrow
a t Bank r a t e ) . F i n a l l y , on June 7, a f t e r t h e market had been f o r c e d t o borrow
a t Bank r a t e s i x time during t h e preceding week, the t e n d e r r a t e inched up
t o 3.69 p e r c e n t where i t remained a t t h e June II4. a u c t i o n .
Table 2.
United Kingdoms
Weekly Treasury B i l l Auctions, A p r i l - J u n e 1963
April
Tender r a t e ^
Allotted to the
d i s c o u n t market (%)
2
E
3.69
3.71
50
14
I ~ E
May
2
A
31
June
_J_
3.71
3.72
3.65
3.65
3.6k
3.69
19
2k
61
k7
k9
27
1/ Per cent p e r annum.
From e a r l y May through June 7 s t h e r e was no covered i n t e r e s t
d i f f e r e n t i a l between U.S. and U.K. Treasury b i l l s . (See Table 9 and Chart 2 . )
Changes i n t h e U.K. b i l l r a t e were o f f s e t by r e d u c t i o n s i n t h e forward d i s c o u n t
on s t e r l i n g i n mid-May and by r i s e s i n t h e U.S. b i l l r a t e i n t h e l a t t e r p a r t
of May and i n e a r l y J u n e .
I n t h e l o c a l a u t h o r i t i e s funds market, demand f o r temporary funds
was l i g h t i n t h e f i r s t h a l f of May as s u b s t a n t i a l t a x revenue was r e c e i v e d .
Demand became somewhat b r i s k a t t h e end of t h e month. Funds were o f f e r e d
from f o r e i g n sources a f t e r mid-May when t h e d i f f e r e n t i a l between t h e P a r i s
E u r o - s t e r l i n g r a t e and l o c a l a u t h o r i t i e s r a t e narrowed. The three-month
l o c a l a u t h o r i t i e s r a t e f e l l from
p e r cent (where i t had remained from
e a r l y A p r i l through May 3) t o U.UU p e r c e n t on May 17. This r a t e was s u s t a i n e d through June 7. (See Table 9.)
Local t r e a s u r e r s had d i f f i c u l t y i n o b t a i n i n g mortgage f u n d s i n
May u n l e s s they were prepared t o pay more than t h e Public Works Loan Board
r a t e of £ - 3 A p e r c e n t . T h e r e f o r e , l i t t l e mortgage b u s i n e s s was done.
However, b u s i n e s s picked up i n e a r l y June when t h e y i e l d oh g i l t - e d g e d
s e c u r i t i e s f e l l t o t h e p o i n t where funds were o f f e r e d i n t h i s m a r k e t .
The E u r o - d o l l a r market s t r e n g t h e n e d i n May, with three-month r a t e s
r i s i n g from 3.66 p e r c e n t on A p r i l 19 t o 3 . 9 1 per c e n t on May 2h (see Table 9 ) .
This has been a t t r i b u t e d to? (a.) c o n t i n e n t a l bank borrowing f o r mid-year
window d r e s s i n g p u r p o s e s j (b) t i g h t money market c o n d i t i o n s i n Germany, t h e
Netherlands and France, making E u r o - d o l l a r s a r e l a t i v e l y cheap and e a s i l y
a v a i l a b l e source of temporary funds $ and (c) I t a l i a n banks renewing t h e i r
maturing p o s i t i o n s i n a d d i t i o n t o borrowing d o l l a r s t o c o v e r / a n outflow of
funds caused by p o l i t i c a l u n c e r t a i n t y .
OFFICIAL USE ONLY
OFFICIAL USE ONLY
G i l t - e d g e d market. Government bond p r i c e s g r a d u a l l y rose in
May. Demand v;as p a r t i c u l a r l y strong i n t h e l a s t t h r e e t r a d i n g days of t h e
month
when the Government bond p r i c e index r o s e from 86.2 on May 28 t o
86.8 on May 30. The e n t i r e range of government s e c u r i t i e s was a f f e c t e d .
(See Table 10 and Chart 6.below.) However, p r i c e s broke s h a r p l y i n t h e
week of June 10 because of domestic p o l i t i c a l developments i n B r i t a i n *
Stock market. Stock p r i c e s showed l i t t l e change from May 1 through
June 7 5 with The F i n a n c i a l Times I n d u s t r i a l Ordinary index f l u c t u a t i n g around
311o (See Table 10 and C h a r t 7 . ) On May 3, t h i s index reached 315 3 t h e h i g h e s t
l e v e l s i n c e August l ? 6 l b u t d e p r e s s i n g and f a v o r a b l e i n f l u e n c e s a l t e r n a t e d
during t h e weeks which followed» Trading was d u l l during t h e week ending
May 10 s because of Labour gains i n l o c a l governments e l e c t i o n s 0 The f o l l o w i n g
week, however, was c h a r a c t e r i z e d as t h e b u s i e s t week i n t h e Stock Exchange
f o r n e a r l y twelve months«, Renewed b u s i n e s s optimism was s t i m u l a t e d i n p a r t
by an o p t i m i s t i c economic outlook p u b l i s h e d by the N a t i o n a l I n s t i t u t e of
Economic and S o c i a l Research, The f o l l o w i n g week (ending May ?.k) was again
a d u l l one, i n t h e absence of any new s t i m u l u s f o r i n v e s t o r s . Then, i n t h e
week ending May 31; market a c t i v i t y was r e v i v e d by f a v o r a b l e r e a c t i o n s t o t h e
Government's a i d t o s h i p b u i l d i n g program and by t h e announcement of t h e
enlarged swap arrangements concluded with t h e F e d e r a l Reserve System.
On June 10, however, t h e s t o c k market r e a c t e d s t r o n g l y t o t h e
Profumo case and t h e I n d u s t r i a l Ordinary index f e l l seven p o i n t s t o 302.6.
Although the l o s s was p a r t i a l l y made up on t h e f o l l o w i n g day, by Jvaie 18
t h e index recovered only t o 308.7•
London c l e a r i n g banks.
month ending May 15, a t about t h e
q u a r t e r of t h i s y e a r . (See Table
a d j u s t e d f i g u r e s f o r n e t advances
made a v a i l a b l e f o r t h e f i r s t time
f o r June,
Table 3.
___
JulySept.
-29
Bank advances continue t o i n c r e a s e i n t h e
same r a t e as was recorded f o r t h e f i r s t
3 . ) The f i g u r e s in Table 3 a r e s e a s o n a l l y
(other than to nationalized industries)
i n the Bank of England Q u a r t e r l y B u l l e t i n
"" "
United Kingdom§ Changes i n bank l o a n s , s e a s o n a l l y - a d j u s t e d 5
:
—
1961 t o 1 9 6 J 1 7
( i n m i l l i o n s of pounds| monthly averages)
1961
Oct.
Dec.
-a
Jan.Mar.
+3
Apr.June
+17
1962
JulySept.
+38
. Oct.Dec.
+15
Jan.Mar.
+U0
a / Unadjusted c l e a r i n g bank f i g u r e s f o r May a r e shown i n Table
b / Estimates by The Economist.
OFFICIAL USE ONLY
1963
h/
Apr,"*- May—
+U3
+U7
OFFICIAL USE ONLY
The problem of bank l i q u i d i t y continues t o e x i s t , even though
t h e l i q u i d i t y r a t i o r o s e t o 30.7 p e r c e n t . However* t h e b a n k s * l i q u i d i t y
s t r a i n s may be eased by cash r e c e i p t s from government s e c u r i t i e s maturing
i n June and from t h e r e l e a s e of f u n d s t o t a x p a y e r s i n J u l y as the r e d u c t i o n
i n p e r s o n a l income t a x t a k e s e f f e c t .
Table U, United Kingdoms London Clearings-Banks 9 Net Deposits and S e l e c t e d A s s e t s
( i n m i l l i o n s of pounds)
-
1961-62
1962-63-
+106
+258
+
11 +
C h a n g e s
+ 30
b/+120
-118
NET DEPOSITS .
Mar,
9
Outstanding
May 15# 1963
"1953"
-9k
+1U8
6,561+
S
-20
-33
+ 2
+ 3
: 2,59k
1,&91
-105
+28 -
SELECTED ASSETS
lo
2,
3o
Claims on P u b l i c Sector
Government s e c u r i t i e s
Treasury b i l l s and
c a l l loans
Loans t o n a t i o n a l i z e d
industries
Claims on P r i v a t e S e c t o r
Advances (net)
Other
S p e c i a l Deposits a t Bank
of England
LIQUIDITY RATIO
+
3
+117
+ I ! ' •: - 11
-15
+146
+117
+ 29
T#
+ 3
30,5
30.5
59
+U91
^S5
+ 38
+77
-220
c/33.6
c/33.0
"
+
u
1,'U39
3
6U
.HI
-
1
425
30,7
30.7
a / f i s c a l y e a r s ending mid-March, Bank balance s h e e t s a r e normally p r e p a r e d f o r
t h e t h i r d Wednesday of each month. .
bZ Adjusted f o r t h e r e c l a s s i f i c a t i o n of 2W4O m i l l i o n from advances t o money on c a l l - i n October 1961,
c / Monthly a v e r a g e s .
I n s t a l l m e n t c r e d i t . New i n s t a l l m e n t c r e d i t extended by f i n a n c e companies
r o s e more t h a n s e a s o n a l l y i n A p r i l , mainly as t h e r e s u l t of automobile s a l e s „
(See Table 5°) Outstanding debt owed to f i n a n c e companies i n c r e a s e d by KLO m i l l i o n .
New c r e d i t extended by household goods shops, on the o t h e r hand, showed only a
small i n c r e a s e , and i t was mainly s e a s o n a l .
OFFICIAL USE ONLY
OFFICIAL USE ONLY
Table 5°
United Kingdom;
Installment Credit
1962
New c r e d i t extended, index
of value (1957=100)
Household goods shops
Finance houses
Credit outstanding
(In m i l l i o n s of pounds)
Household goods shops
Finance houses
111
liiO
+ 9
4£
Total
-6-
.
-U0
1963
Jan0Mar.
Feb.
97
132
93
116
99
I6h
101
177
- 8
z l
- 3—
- 3
- 2
+ b
+ 3
+10
308
513
-13
- 6
+ 2
+ 7
881
Mar.
Apr.
Outstanding
A p r i l 30, 1963
——
——
Foreign t r a d e . Actual B r i t i s h exports i n May amounted t o £36U
m i l l i o n compared with £338 - m i l l i o n i n May 1962. ((See Table 6 . ) On a s e a s o n a l l y a d j u s t e d b a s i s , t h e May f i g u r e was a c t u a l l y £>8 m i l l i o n below e x p o r t s i n March,
However, t h e u n u s u a l l y s e v e r e w i n t e r and the s e t t l e m e n t of t h e U.S. dock s t r i k e i n
early. March r a i s e a q u e s t i o n about whether t h e March export f i g u r e can be
considered comparable t o t h e May figure® On t h e import s i d e , s e a s o n a l l y - a d j u s t e d
imports were L21 m i l l i o n h i g h e r t h a n i n A p r i l , t h e high p r i c e of sugar c o n t r i b u t i n g
t o the r i s e i n May import v a l u e s . The a d j u s t e d t r a d e d e f i c i t f o r May was about
t h e same as the monthly average f o r t h e f o u r t h q u a r t e r of 1962 and t h e f i r s t
q u a r t e r of 1963.
Table 6 . United Kingdoms Foreign Trade
(In m i l l i o n s of pounds, s e a s o n a l l y - a d j u s t e d monthly averages)
Imports c . i . f .
Exports f.Oob.
Re-exports f . o . b .
Balance
Mar.
1962
Apr.- JulyJune
Sept.
-365
-373
306
12
- U7
319
lh
- Uo
0ctoDeco
Jan,Mar.
1963
Mar.
Apr.
Majr
-389
-39U
3U1
_ J 3
.22
- 56
- Uo
12
-37U
318
1U
-375
326
12
-383
3U9
12
- 53
- U2
- 37
- 22
-385
320
320
. F o r e i g n exchange market. The spot r a t e weakened f o r a few days
around May 6, as some f o r e i g n e r s converted s t e r l i n g a s s e t s i n t o d o l l a r s f o r
investment i n t h e E u r o - d o l l a r market, where a t t r a c t i v e r a t e s were being
o f f e r e d , (See Table 9 . ) In mid-May, t h e spot r a t e recovered. Towards t h e
end of t h e month i n c r e a s e s in t h e s p o t r a t e were r e s t r a i n e d by Bank of 5hgland
purchases of d o l l a r s . The forward d i s c o u n t f e l l from 0 . 7 3 per c e n t on May 3 t o
O.6I1 p e r cent on May 31, r e f l e c t i n g i n c r e a s e d confidence i n s t e r l i n g . A s l i g h t
widening of t h e forward discount took p l a c e on June 7 i n r e a c t i o n t o t h e Profumo c a s e ,
OFFICIAL USE ONLY
-
OFFICIAL USE ONLY
Ool-i and f o r e i g n exchange r e s e r v e s » B r i t i s h r e s e r v e s i n c r e a s e d by
$ 8 1 m i l l i o n i n May. ( S e e - T a b l e 7 . ) " R e p o r t s ' on f o r e i g n exchange market
a c t i v i t i e s s u g g e s t t h a t t h e y were a c q u i r e d during t h e l a t t e r p a r t of t h e month.
I n t h e May i s s u e of F i n a n c i a l S t a t i s t i c s , t h e B r i t i s h C e n t r a l S t a t i s t i c a l
O f f i c e s commenced p u b l i c a t i o n , w i t h a~three-months l a g , of t h e d i s t r i b u t i o n
of r e s e r v e s between gold and f o r e i g n exchange* I n December 1962, 92 p e r c e n t
of B r i t i s h r e s e r v e s c o n s i s t e d of gold a s c o n t r a s t e d w i t h 68 p e r c e n t i n
December 1961 and 76 p e r c e n t i n June 1962. The r e l a t i v e l y low p r o p o r t i o n
of gold h e l d on t h e s e e a r l i e r d a t e s a r e t h e consequence of B r i t a i n ' s drawings
of f o r e i g n c u r r e n c i e s from t h e IMF0
Table ? .
~
United Kingdoms ^ o l d and F o r e i g n Exchange Reserves
( i n m i l l i o n s of U.S 0 d o l l a r s )
•
1962
•
1963
Jan.Jan.- JulyMar. Mar. Apr.
June_ Dec.
Gold and c o n v e r t i b l e
currency
Adjusted f o r s p e c i a l
transactions
Gold a s a p e r c e n t a g e
of t o t a l r e s e r v e s
(end of p e r i o d )
+115
-626
+
9
+690
«= 20
-211
76%
92%
11%
Ma£
+ 17
+81
-183 @.y
+81
—
17%
n.a.
n.a.
Outstanding
May 31, 1963
2,929
n0a0
B u l l i o n m a r k e t . From May li-j.^ through May 22 t h e demand i n t h e
London gold market was above a v e r a g e . On May 17, v e r y heavy s p e c u l a t i v e
demand from S w i t z e r l a n d was r e p o r t e d , a l t h o u g h t h e n a t i o n a l i t y of t h e u l t i m a t e
b u y e r s was not known. The f i x i n g p r i c e r o s e t o $35,083 on May 1 7 . (See Table 8 . )
From May 1 through May 13 and from May 23 through June 12 t h e market, was q u i e t .
However, a s u b s t a n t i a l demand f o r gold was r e p o r t e d on June 13.
Table 8 .
March 29
April 5
11
19
U n i t e d Kingdoms F i x i n g P r i c e f o r Gold B u l l i o n
( i n U.S. d o l l a r s p e r f i n e ounce)
35.111
35.103
35.120
35.091
A p r i l 26
May
3
- 10
17
35.082
35.076
35.076
35.083 ~
May 2k
31
June 7
Hi
35.079
35.073
35.078
35.08k
a/ Revised„ I t was o r i g i n a l l y t h o u g h t t h a t U0K» gold and d o l l a r r e s e r v e s
had teen a f f e c t e d i n A p r i l by A r g e n t i n e and A u s t r a l i a n s t e r l i n g t r a n s a c t i o n s w i t h
t h e Fund.
Europe and B r i t i s h Commonwealth S e c t i o n .
OFFICIAL USE ONLY
Table 9* United Kingdom:
Treasury B i l l Yields and Exchange Bates
3-*o, Treasury b i l l arbitrage calculation
U.S. D i frerfer
3 - * o . °y
In favor
pomdV
ence
M * bill
High
Low
1962
Feb. 21
~~Mar. 1
'
8
15
22
29
Apr. 5
11
19
26
May
3
10
17
2k
31
June 7
3.78
U.25
2.73
2.7k
1.05
i.5i
-0.31
-1.92
-O.Ul
-0.79
-0.53
-0.11
3.31
2.86
0.U8
3.31
3.31
3.72
3.66
3.66
3.59
3.59
3.66
3.66
3.63
3.56
3.56
3.61
2.90
2.86
2.85
2.
2.90
2.89
2.88
2.87
2.87
2.87
2.89
2.88
2.93
2.97
O.UU
0.U5
0.U6
0.8U
0.76
0.77
0.71
0.72
0.79
0.79
0.7U
3.59
2.97
3.31
-0.81
-1.08
0.62
-0.67
0o6U
281.75
279.97
U.13
3«UU
U.87
U.19
-0.31
280.30
280.25
280.05
3.UU
3.53
3.63
3.72
3.69
3.69
3.69
3.69
3.66
3.72
3.73
U.31
it.31
U.31 .
-0.62
0.73
0.68
0.7U
-0.36
-1.29
-1.31
-1.09
-1.19
-1.13
-0.89
-0.73 .
-0.71
-0.69
-0.73
Spot
London deposit rates
pound
U.S.
Local
(U.S. ju/' d o l l a r
authority
cents P ( 3 - * o . )
_ _ _ _ _
-o.U5
-0.55
-0.32
-0.48
-o.Ui
-o.io
—0.06
-0.6U
-0.05
280.01
280.00
279.96
280.09
280.07
280.10
280.06
280.97
280.90
280.9k
279.97
280.01
3.8U
3.91
3.8U
280.OU
3.91
3.81 -
u.uu
u.uu
U.50
U.56
U.56
U.56
U.56
56
50
,UU
uu
uu
uu
&/ Market quotation f o r Friday. The 1963 f i g u r e s , assembled f o r a r b i t r a g e c a l c u l a t i o n s ,
a r e ttife premiums on t h e U.S. d o l l a r , b / Noon buying r a t e i n New York.
Table ID.United Kingdom*
- 196U
1962
- High
Low
Feb.
Mar.
28
7
iu
Apr.
May
June
a/
21
28
U
10
18
25
2
9 '
16
23
30
6 /'
Selected Capital Market Yields
U.K. Government bend y i e l d s
3*.
5 - W
2 0 0 8 - 1 2 War Loan Consols
1965-75
Share
yield
Yield
gap
Share
prices
5.85
3.90
6.28
5.00
6.35
5.U5
6.77
U.80
6.57
5.51
5.15
5.78
1.U2
-0.27
309.6
261.3
3.86
3.85
3.89
3.97
U.05
U.oi
3.87
3,80
3.75
3.65
3.72
3.70
3.72
3.67
3.65
5.UU
5.39
5.U2
5.38
5.37
5.32
5.27
5.21
5.27
5.25
5.23
5.15
5.1U
5.06
5.03
6.00
5.95
5.95
5.90
5.87
5.85
5.83
5.70
5.73
5.73
5.68
5.63
5.60
5.55
5.52
6.12
6o06
6.05
5.95
5.93
5.90
5.87
5.75
5.77
5.7U
5.70
5.65
5.66
5.60
5.98
5.91
5.91
5.82
5.80
5.76
5.72
5.60
5.62
5.59
5.56
5.U6
5.50
5.U2
5.U1
5.0U
5.0,7
5.05
5o i l
5.05
5.03
5.09
U.93
U.91
U.89
U.95
U.9U
U.99
U.99
5.02
0.9U
0.8U
0.86
0.71
0.75
0.73
0.63
0.67
0.71
0.70
0.61
0.52
306.2
30U.5
305,U
302.0
305.6
303.3
30U.3
311 o 3
313.1
31U.2
310.5
31U.1
311.0
311.0
311.0
Financial Times.
5.59
0.51
0.U3
0.39
"
b / Difference
between y i e l d on 2-1/2 per cent Consols and share y i e l d .
INTEREST ARBITRAGE,
UNITED
STATES/CANADA
T h u r s d a y figi
3-MONTH
TREASURY
BILL R A T E S
-MJ
! RATE
DIFFERENTIAL
AND
FORWARD
CANADIAN
DOLLAR
S P R E A D I N F A V O R OF C A N A D A *
RATE
DIFFERENTIAL WITH
FORWARD
EXCHANGE
COVER:
IV
N E T I N C E N T I V E IN F A V O R OF C A N A D A •
D
1960
1961
S
S
1962
1963
D
.
INTEREST
Friday
ARBITRAGE,
NEW
YORK/LONDON
fiqur«t
3-MONTH
\
RATE
|
Pe r cant
TREASURY
I
BILL
RATES
LONDON
DIFFERENTIAL
AND
3-MONTH
FORWARD
STERLING
S P R E A D IN FAVOR Of L O N D O N
RATE
DIFFERENTIAL
WITH
FORWARD
EXCHANGE
COVER
per
annum
INTEREST.ARBITRAGE
FOR
GERMAN
COMMERCIAL
BANKS
Frjjd a y f i g u r « t
P
3-MONTH
TREASURY
BILLS,
E U R O - D O LLA R J ) E P O SIT
INTERBANK
LENDING
RATES
RATE
~
AND
P
GERMAN INTERBANK
I LOAN R A T E -
1
RATE
1
DIFFER ENTIAL. A N D
I
1
F O R W A RD
1
,
1
DEU TSCHE MARK
S P R E i I D IN F A V i O R O f E R A N K F U R T :
-
F O R W A R D RATE
DISCOUNT ( - )
INTERIMINK L O A N RATE
|\
1
h
I
v
J
I
1
1
RATE
—
T R E A S U R Y BILLS
1
1
1
1
1
1
DIFFERENTIAL
x
1
i
JH
WITH
NET I N C E N T I V E :
Z
I
n
r
i
FORWARD
f A V O
g
o f
n
i 1 i M
EXCHANGE
-
1
v
p
1
1
1 1
I I
COVER
FRANKFURT ( + )
S
1961
* N o I e:
19 62
Special lorword f ole available to German commercial bonkt.
1963
I I
INTEREST A R B I T R A G E ,
Friday figures
3 — M O N T H TREASURY
FRANKFURT
BILLS A N D
/
LONDON
INTERBANK
LENDING
RATES
" L O A N BATE
'A
U u
1 ii
i i
i i 1 i i 1 i i 1 i i 1 i i
RATJE^DIFFERENTIAL
AND
3—MONTH
FORWARD
STERLING
K - i '
J
\
/ ^ / " " v V g E R M A N T R E A S U R Y Bills
1 1 — f v - / —
GERMAN INTERBANK LOAN R A T E ^ Y .
RATE
DIFFERENTIAL
WITH
V—
FORWARD
|
EXCHANGE
"1
COVER
c h
°"5-
SHORT-TERM
^
INTEREST
-
RATES *
I—1
sr
T"
\ -V
jTlUBO-OOHAR - 10ND0N
CANADA
f
"X" 3-month treoiury bill rolei lor oil covnlriet except Japan (3 month interbank depoiit roleJ~ond Swili«rland~(3-monlh depoiit role) . |
"j" 3-month rale lor U S dollar depouls in London
LONG-TERM
BOND
YIELDS
W
\-z
INDUSTRIAL
STOCK
INDICES'
other nocki
the
Tokyo exchonge.
SPOT
EXCHANGE
RATES
- MAJOR
CURRENCIES
AGAINST
U.S.
DOLLAR
Above por
GERMAN MARK
Above par
•EIGIAN FBANC
Below p a r
-
1
^
-
— ITALIAN LIRA —
{
™i
C A N A D I IAN D O L L A R
vUL
F
E
M
A
M
J
i i
J
1961"
A
v
i i
S
-
:
0
N
1 1 .11
D
7
E
M
A
M
-
J
1962
Por
A
74"
I
.T
11 1 1 1 1 1 I 11~
II
J
•".«
doifar"
j j y -
V
,,
r i i
r \
x
V
y*\
\ {
yA A - A —
.8
v
i
Below
S
0
N
D
J
E
M
A
M
J
7
1963
A
5
0
N O
w '
^
FORWARD
EXCHANGE
RATE
Friday * igures
AGAINST
U.
S.
DOLLARS
DISCOUNT
AGAINST
AGAINST
POUND
POUND
STERLING
STERLING
- LONDON
- LONDON
DUTCH GUILDER
1962
@FedFRASER