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BOARD O F 3 0 V E R N 0 R S DIVISION OF I N T E R N A T I O N A L F I N A N C E H. 13 March 3 , 1965. No. 185 I - I II HI. United Kingdom Nine C h a r t s on F i n a n c i a l Markets Abroad L a t e s t F i g u r e s P l o t t e d i n H.13 Chart S e r i e s l r — % f t e d Kingdom; Money and C a p i t a l Markets ~~ December 196U t o F e b r u a r y 1965 Between December and F e b r u a r y , B r i t i s h f i n a n c i a l markets e x p e r i e n c e d t h r e e d i s t i n c t p e r i o d s of r e l a t i v e weakness and an i n t e r v e n i n g p e r i o d (midJ a n u a r y t o m i d - F e b r u a r y ) of r e l a t i v e s t r e n g t h a During t h e f i r s t h a l f of December d e t e r i o r a t i n g c o n d i t i o n s c u l m i n a t e d i n a n e s p e c i a l l y s h a r p f a l l i n bond and s t o c k p r i c e s i n t h e second week of t h e month. On December 1 8 , t h e Government B r o k e r announced buying p r i c e s f o r a l l l i s t e d government bonds t o h a l t t h e s e l l i n g p r e s s u r e i n t h a t m a r k e t . Bond p r i c e s h e l d f a i r l y s t e a d y , b u t t h e volume of t r a d i n g remained s m a l l u n t i l m i d - J a n u a r y , when t h e announcement of improved t r a d e f i g u r e s f o r December i n i t i a t e d a month-long e a s i n g of market y i e l d s . I n m i d - F e b r u a r y , y i e l d s began t o r i s e once a g a i n , a f t e r t h e announcement of a d v e r s e t r a d e f i g u r e s £>r J a n u a r y , During t h e p e r i o d under r e v i e w , t h e f o r e i g n exchange market f o r s t e r l i n g e x p e r i e n c e d i d e n t i c a l p e r i o d s of a l t e r n a t i n g weakness and s t r e n g t h , (See Table 1 , ) Table 1 . United Kingdom? S e l e c t e d F i n a n c i a l Market I n d i c a t o r s December 196k t o F e b r u a r y 1965 Interest rates ( p e r c e n t p e r annum) Treasury b i l l (maximum t e n d e r ) Government bonds —' 5% 1967 % 1971 3-1/2% 1979-81 5-1/2% 2008-12 3-1/2% War Loan Stock i n d e x a ^ b / Actual Dec, h 0.00 0.00 -0,10 0.00 6.53 6.U5 6.05 6,07 6,17 6,30 6.33 +0,35 +0.36 +0.20 +0.12 +0,07 0,00 +0.07 -0.17 -0.25 -0.05 -0.07 —0,06 +0,07 <0,15 +0.05 +0.02 +0.03 6.U2 6.U0 6.37 6,1:2 6.38 6.37 6,1*2 6.U6 338.2 +0.10 +o,oU +0,13 -Hi .8 +10.U Actual 279.08 -2.68 +17.7 6,1+2 6,1*7 +1.7 353.1 279,5k — -— 3U1.1 Values 279.07S/279.56 -2.71^-2.52 Previous Thursday, F i n a n c i a l Times JO I n d u s t r i a l s . Thursday—two-day q u o t e f o r t h e s p o t r a t e , Actual Feb, Feb, 19 26 6,63 Exchange r a t e s ' Spot (U.S. c e n t s ) 279.15 Forward ( p e r c e n t p e r annunj) -2.5U a7 V Change f r o m p r e v i o u s d a t e t o : Dec, Jan, Feb, Feb, 17 15 12 19 OFFICIAL USE ONLY ( D e c o n t r o l l e d a f t e r s i x months) -2.81 279.U3 —2.82 OFFICIAL USE ONLY - 2 - There was a g e n e r a l l y s t r o n g e r tone i n f i n a n c i a l markets between midJanuary and mid-February, In t h e g i l t - e d g e d market, s u p p l i e s of t h e s h o r t - and long-dated " t a p i s s u e s " which anchor t h e y i e l d curve were e x h a u s t e d . At the s h o r t end, the k per cent Exchequer 1968 "tap" was replaced by a ZkSO m i l l i o n tranche of 5> p e r cent Exchequer 196?• At the long end, the 5-3/U p e r cent "tap" was not o f f i c i a l l y r e p l a c e d , perhaps i n d e f e r e n c e t o the e x i s t i n g l e v e l of l o n g term y i e l d s » In a d d i t i o n , s e v e r a l l o c a l a u t h o r i t y i s s u e s were very f a v o r a b l y r e c e i v e d and o v e r s u b s c r i b e d , Two important ones, i s s u e d by t h e London City Council, were p r i c e d a t par b e a r i n g a coupon of 6-3/U per c e n t . Rumors of a decrease i n Bank r a t e a s well as improved t r a d e r e t u r n s f o r December c o n t r i b u t e d t o these improved c o n d i t i o n s . By c o n t r a s t with the g i l t - e d g e d market, c o n d i t i o n s i n t h e money market g e n e r a l l y remained t i g h t f o r the e n t i r e p e r i o d under r e v i e w . On some occasions in January and F e b r u a r y , the d i s c o u n t houses were f o r c e d t o borrow a t Bank r a t e . There were s i g n s t h a t t h e higher Bank r a t e and shortage of f u n d s were a f f e c t i n g o t h e r c r e d i t markets. The f i n a n c i a l p r e s s reported t h a t t h e s e two f a c t o r s were causing a slowdown i n c o n s t r u c t i o n a c t i v i t y 5 and i n January t h e A g r i c u l t u r a l Mortgage Corporation announced an i n c r e a s e i n i t s mortgage r a t e r cl^+tofgil^lrageSf 3 8 6 inCreaSe * the b u i l d i n g Money market remains t i g h t . During the p e r i o d under review , t h e r e was no g e n e r a l easing of the t i g h t c r e d i t c o n d i t i o n s t h a t have p r e v a i l e d s i n c e the i n i t i a l stages of the s t e r l i n g c r i s i s . With the e x c e p t i o n of t h e Treasury b i l l y i e l d , money r a t e s tended t o r i s e during January and February a f t e r a s l i g h t d r o p - o f f around t h e t u r n of t h e y e a r . (See Table 2 . ) Table 2 , C a l l money a/ 90-day d e p o s i t s / Local a u t h o r i t y — Euro-# United Kingdom: S e l e c t e d Money Market Rates December 196U - February 1965 (per c e n t p e r annum) December 11 7.50 U.68 Treasury b i l l by 90-day market r a t e " 6 , t | l January 5738 22 60UU 335 26 6.14+ 7.56 U.62 7.18 U.SO 7.25 iwU6 7.31 h.$0 7.Wi k.# 7.63 k.56 6.I4I 6.UU 6.U1 6.32 6,32 6.29 5 7 Median of a range of r a t e s quoted i n t h e F i n a n c i a l Times. 15/ Adjusted t o a U.S. b a s i s . February 19 530 OFFICIAL USE ONLY OFFICIAL USE ONLY With the e x c e p t i o n of a few d a y s , c a l l money has been i n s h o r t s u p p l y . In December, the Bank of England p e r i o d i c a l l y provided enough a s s i s t a n c e t o t h e d i s c o u n t market so as t o e l i m i n a t e t h e n e c e s s i t y of borrowing a t Bank r a t e * However, a t the end of December t h e u s u a l semi-annual borrowing d i d occur e During t h e f i r s t t h r e e weeks of January, t h e Bank of England again bought enough b i l l s , when t h e occasion demanded, t o a l l e v i a t e the need t o borrow a t Bank r a t e , although n o t enough t o keep t h e y i e l d on Treasury b i l l s from inching up f r o m 6»Ul p e r c e n t t o 6.Wi p e r c e n t ( a d j u s t e d t o a U.S. b a s i s ) . On January 2 2 , t h e d i s c o u n t houses r a i s e d t h e i r buying p r i c e f o r Treasury b i l l s a t t h e weekly t e n d e r f o r t h e f i r s t time s i n c e t h e i n c r e a s e i n Bank r a t e on November 2 3 . F u r t h e r i n c r e a s e s followed on January 29 and February As a r e s u l t , t h e market y i e l d d r i f t e d down from 6»bh per cent t o 6.32 p e r c e n t . During t h i s p e r i o d the a s s i s t a n c e provided by the Bank of England was on a somewhat smaller s c a l e t h a n b e f o r e , f o r c i n g the houses t o borrow a t Bank r a t e upon a few o c c a s i o n s e P a r t l y i n response t o t h i s , t h e b i d was lowered s l i g h t l y on February 12 with no p e r c e p t i b l e impact on t h e market r a t e . For a p e r i o d of two weeks t h e r e a f t e r enough a s s i s t a n c e was provided t o avoid t h e need f o r new borrowings a t Bank r a t e . Then on February 2 6 , the bid was r a i s e d a g a i n , and t h e market y i e l d eased t o 6.29 • I n t h e 90-day d e p o s i t market, c o n d i t i o n s changed very little. There was a n o t i c e a b l e e a s i n g of r a t e s a t the t u r n of t h e y e a r , but s i n c e t h e n they have f l u c t u a t e d around a g e n t l y r i s i n g t r e n d . Because of t h e s e t i g h t c o n d i t i o n s , l o c a l a u t h o r i t i e s had t u r n e d t o t h e Public Works Loan Board. By mid-January, t o t a l borrowing reached an e s t i m a t e d £203 m i l l i o n — £ 3 m i l l i o n mare t h a n was a n t i c i p a t e d f o r t h e e n t i r e f i s c a l year ending March 31. London c l e a r i n g banks improve t h e i r l i q u i d i t y p o s i t i o n s i n January. During the f o u r t h q u a r t e r of 196U t h e l i q u i d i t y r a t i o s of t h e London c l e a r i n g banks (the r a t i o of l i q u i d a s s e t s t o gross d e p o s i t s ) f l u c t u a t e d j u s t above 30.00 p e r c e n t . Although t h i s was two p e r c e n t a g e p o i n t s above t h e s e t minimum r a t i o , i t did not provide a comfortable working margin i n l i g h t of the cash d r a i n the banks f a c e i n the e a r l y p a r t of 196 S when government t a x r e c e i p t s a r e s e a s o n a l l y a t a p e a k . (See Table 3») between largely decline average In a major e f f o r t t o improve t h e i r l i q u i d i t y p o s i t i o n s , the banks mid-December and mid-January i n c r e a s e d t h e i r holdings of l i q u i d a s s e t s , a t t h e expense of advances. The d e c l i n e i n advances brought w i t h it a i n d e p o s i t s , and t o g e t h e r with t h e r i s e i n l i q u i d a s s e t s pushed t h e l i q u i d i t y r a t i o up t o 32.10 per c e n t by mid-January. The d r i v e f o r improved l i q u i d i t y p o s i t i o n s served t o i n t e n s i f y t h e g e n e r a l c r e d i t squeeze mentioned e a r l i e r . The d e c r e a s e i n advances of £66 m i l l i o n (£it0 m i l l i o n 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 ) was, i n t h e view of t h e Bank of England, " t h e f i r s t s i g n i f i c a n t check i n t h e growth of advances s i n c e September 1961"» At t h i s time i t seems t h a t t h e f a l l can be a t t r i b u t e d both t o the c e n t r a l b a n k ' s December c a l l f o r a s e l e c t i v e c r e d i t squeeze and t o t h e d e s i r e of t h e banks t o improve t h e i r l i q u i d i t y p o s i t i o n s . OFFICIAL USE ONLY h OFFICIAL USE ONLY Table 3» United Kingdoms London Clearing Banksj Selected Assets and L i a b i l i t i e s October 1961). - January 1965 (millions of pounds) October Net Assets — Cash r e s e r v e s Other l i q u i d a s s e t s Advances Other a s s e t s Total Net L i a b i l i t i e s Deposits Other Total - Change from previous month t o : November December January +6U.2 -33.1 +Ul»7 +25.7 - 7.7 +123.9 -65.U +163.3 -66 o 5 + 9.1 +U0.5 -36.2 + 3.1 -33.1 +96.7 +27.2 +123.9 -lU.8 +55.3 +L0.5 + 3.2 +87.0 +62.7 - 06 +152.5 -13.3 -3U.1 +11.5 +15U.8 -2.3 +152.5 + 2.8 Outstanding January 20 701.8 2,150.0 1,171.6 1,932.2 9,255.6 V 2/ Liquidity r a t i o ^/ Cash reserve r a t i o — 30.57 8.12 A e- t u a 1 30.15 8,00 8,211.1 9,255.6 V a l u e s 32.10 30.61 7-91 8.53 — u 1 / Excludes " f l o a t and i n t e r - b a n k balances a 2/ Ratio of cash t o gross d e p o s i t s 0 _3/ Ratio of t o t a l l i q u i d a s s e t s t o gross d e p o s i t s 0 Sourcei Bank of England® Gilt—edged y i e l d s r i s e once a g a i n . Government bond y i e l d s moved up in mid-February s a f t e r n e a r l y a month of slow, but s t e a d y , d e c l i n e . However, t h i s r e c e n t break i n p r i c e s did not push y i e l d s t o the l e v e l s recorded i n the mid-December sh ake-o ut. In a d d i t i o n , t h i s new r e v e r s a l did not immediately c a r r y over i n t o the stock market, and p r i c e s there tended t o remain f i r m . (See Table 1») off the (in for In l a t e February, however, bond y i e l d s f i r m e d , but stock p r i c e s f e l l sharply a f t e r the government's announcement on February 22 t h a t i t s "above l i n e " expenditures f o r the next f i s c a l year were estimated t o be 8.9 per cent money terms) g r e a t e r than the o r i g i n a l estimates f o r s i m i l a r expenditures the c u r r e n t f i s c a l y e a r , (See Table 1 . ) Trade d e f i c i t narrows in December but widens i n January<> Through November of 1961; t h e r e was no basic change i n the"monthly t r a d e r e t u r n s s imports tended to grow while exports remained s t a g n a n t . In December exports picked up. n o t i c e a b l y bringing about a s i g n i f i c a n t reduction i n the monthly d e f i c i t . However, i n January, exports f e l l o f f , imports remained a t a high l e v e l and the d e f i c i t widened by £16 million„ (See Table U.) OFFICIAL USE ONLY OFFICIAL USE ONLY - 5 - Table U. United Kingdom: F o r e i g n T r a d e , 196U-1965 " ( m i l l i o n s of pounds; y 1 9 6 1* December III II I JL Imports ( o . i . f . ) 1*69 U78 U76 U76 U77 Exports ( f . o . b . ) Re-exports ( f . o . b . ) Balance Trade balance b/ 1 9 6 5 January U65 367 365 363 377 396 368 12 13 lk 13 13 lk -90 -99 -99 -88 -67 -83 -U2 -18 -52 -U2 -19 -3h a/ Monthly average; r e v i s e d d a t a based on coverage changes e f f e c t i v e January Foreign exchange h o l d i n g s r i s e i n F e b r u a r y , O f f i c i a l h o l d i n g s of gold and f o r e i g n exchange r o s e by about $6U m i l l i o n i n F e b r u a r y , a f t e r a $17 m i l l i o n f a l l i n January, This i s t h e f i r s t monthly i n c r e a s e i n r e s e r v e ' holdings s i n c e May 196k, At t h e end of F e b r u a r y , r e s e r v e s t o t a l e d about $2*36 m i l l i o n , B r i t i s h o f f i c i a l s have not as y e t d i s c l o s e d t h e amount of c e n t r a l bank a s s i s t a n c e u t i l i z e d i n t h e f o u r t h q u a r t e r of 1961* or t h e amount of r e p a y ments made i n F e b r u a r y , As a r e s u l t , monthly changes i n f o r e i g n exchange h o l d i n g s i n d i c a t e only t h e d i r e c t i o n of movement i n B r i t a i n ' s r e s e r v e p o s i t i o n and s u g g e s t , p e r h a p s , whether g a i n s or l o s s e s were g r e a t e r i n one month a s opposed t o any o t h e r month# Foreign exchange markets show a l t e r n a t i n g p e r i o d s of weakness and s t r e n g t h . Changes i n c o n d i t i o n s i n the f o r e i g n exchange markets were g e n e r a l l y p a r a l l e l t o t h o s e i n domestic f i n a n c i a l markets d u r i n g t h e p e r i o d under review® From December through mid-January spot s t e r l i n g remained c l o s e t o 279*00 (U.S. c e n t s ) and the forward d i s c o u n t f l u c t u a t e d between -2*60 and -2,71. per cent p e r annum. I n mid-January c o n d i t i o n s began t o improve and by F e b r u a r y 5 t h e spot r a t e had climbed t o 279«U8 (U,S. c e n t s ) and the forward d i s c o u n t had narrowed t o - 2 . 5 5 p e r cent p e r annum. This improvement was s u s t a i n e d through t h e f o l l o w i n g week, b u t on February 15 s t e r l i n g came under s e l l i n g p r e s s u r e : t h e s p o t r a t e f e l l , and t h e forward d i s c o u n t widened. Through t h e end of F e b r u a r y , t h e r e were no s i g n s of a s u s t a i n e d rebound from t h i s l a t e s t setback# On February 26, spot s t e r l i n g was quoted a t 279»h3 (U,S, c e n t s ) and t h e forward d i s c o u n t a t - 2 . 8 1 p e r c e n t p e r annum, (See Table 5») There were no s u b s t a n t i a l changes i n t h e covered d i f f e r e n t i a l s on comparable U,S,/U,K, o b l i g a t i o n s from e a r l y December t o mid-February# During t h i s i n t e r v a l , a r b i t r a g e i n c e n t i v e s f o r Treasury b i l l s f a v o r e d New York by 12 b a s i s p o i n t s or l e s s ; t h o s e f o r l o c a l a u t h o r i t y - « E u r o - d o l l a r d e p o s i t s f a v o r e d t h e l o c a l a u t h o r i t i e s by between 10 t o 20 b a s i s p o i n t s ; and t h o s e f o r Eurod o l l a r deposits—New York c e r t i f i c a t e s of d e p o s i t f a v o r e d E u r o - d o l l a r d e p o s i t s by between 3 3 and 62 b a s i s p o i n t s . With t h e widening of the forward d i s c o u n t OFFICIAL USE ONLY OFFICIAL USE ONLY - 6 - a f t e r m i d - F e b r u a r y s t h e covered d i f f e r e n t i a l 011 T r e a s u r y b i l l s ( i n f a v o r of New York) i n c r e a s e d t o b a s i s p o i n t s by F e b r u a r y 19 and 50 b a s i s p o i n t s on F e b r u a r y 2 6 , The covered d i f f e r e n t i a l on l o c a l a u t h o r i t y — E u r o - d o l l a r d e p o s i t s narrowed s i g n i f i c a n t l y t h e n widened a s lcc.al a u t h o r i t y rates r o s e * (See Table 5») T a b l e 5» United Kingdom; U.K»/U.S. Exchange Rates and A r b i t r a g e C a l c u l a t i o n s December"%96It « " F e b r u a r y 1965 _ _ - T " January I T ~ W T ~ February "19 279,01 279,01 278.97 279,12 279.25 279,L8 279.Sk 279.13 =2.68 =2,72 -2„6l -2.61 -2.65 -2.5S -2.81 -2.82 278,15 278,16 278.00 278.kO 278.75 279.25 279,39 279.38 Treasury b i l l s U.K. ( c o v e r e d ) U.S. Differential 3.73 3.80 -0.07 3.69 3.80 -0.11 3.83 3.77 +0.06 3.80 3.81 -0,01 3.73 3.83 -0.3.0 3.77 3.89 -0.12 3.k9 3.9L -o.U5 3.U7 3.97 -0.50 Deposit r a t e s Local a u t h o r i t y (covered) Euro-S Differential 1.82 L.68 +0.1k U.81i 1.62 +0,22 Uo57 1.50 +0,07 lio65 k.L6 +0.19 L.60 a.so +0.10 1.70 L.# +0.20 W9 lu56 +C0O3 U.81 L.56 +0,2S L.75 1,13 +0,62 k.62 a,56 +0 a it-3 li 0U4. li.n +0.33 h«idi a.10 +0.31 L.50 +O.L8 +0J36 k.So k,20 +0,30 14063 L.25 +0,38 Exchange r a t e s Spot (U.S. c e n t s ) Forward ( p e r cent p e r annum) Security sterling (U»Se c e n t s ) "2F" 3-month y i e l d s and yield differentials Euro-S S:/ New York C/D Differential a/ b/ a /b/ P r e v i o u s Wednesday» " ^ Secondary o f f e r i n g r a t e s f o r New York n e g o t i a b l e c e r t i f i c a t e s of t i m e d e p o s i t s . Demand f o r gold r i s e s a s French c o n v e r t d o l l a r r e s e r v e s <> The demand f o r gold which had i n t e n s i f i e d i n e a f l y H ) e e e m b e ^ the "latter part of t h a t month and t h e London f i x i n g p r i c e ranged i n t h e neighborhood of $35„120 p e r f i n e ounce* At t h e t u r n of t h e y e a r r e p o r t s i n t h e B r i t i s h and c o n t i n e n t a l p r e s s began t o s p e c u l a t e on t h e p o s s i b l e ...vriversicn of do l i a r z gold by t h e French a u t h o r i t i e s » During t h e f i r s t week of January t h e demand f o r gold i n c r e a s e d s u b s t a n t i a l l y and on F r i d a y s J a n u a r y 8 , t h e London f i x i n g p r i c e r e a c h e d 35?< 150 p e r f i n e o u n c e . That &rternoon t h e U»S„ Treasury 7- announced t h a t i t r e g a r d e d t h e f i g u r e of $35,00 p e r ounce a s immutable, The demand f o r gold t h e n eased o f f and on F e b r u a r y 5 t h e f d x i n g p r i c e was $35,1:25. OFFICIAL USE ONLY OFFICIAL USE ONLY - 7 Statements by French a u t h o r i t i e s on the gold p o l i c y of t h e Bank of France and t h e r o l e of gold as t h e major means of i n t e r n a t i o n a l exchange i n February generated renewed demands f o r gold. By February 26 the p r i c e a t the f i x i n g had climbed t o $35*1686 per f i n e ounce# (See Table 6 , ) Table 6 , United Kingdom: London F i x i n g P r i c e f o r Gold December 1961; - February 1965 Price per f i n e ounce (U.S. d o l l a r s ) December 11 31 35,122 35*123 8 January 22 29 5 February 12 26 35.150 35.125 35,131 35,125 35»Ht7 35,1686 Europe and B r i t i s h Commonwealth Section II* Sine Charts on F i n a n c i a l Markets Abroad Chart 1 - I n t e r n a t i o n a l Money Market Yields on U,S, D o l l a r I n v e s t o r s Chart 2 - I n t e r e s t A r b i t r a g e , United States/Canada Chart 3 - I n t e r e s t A r b i t r a g e , New York/London Chart U - I n t e r e s t A r b i t r a g e f o r German Commercial Banks Chart 5 - S h o r t - t e r m I n t e r e s t Rates Chart 6 - Long-term Bond Yields Chart 7 - I n d u s t r i a l Stock I n d i c e s Chart 8 - Spot Exchange Rates - Major Currencies Against U.S. D o l l a r Chart 9 - 3-month Forward Exchange Rates OFFICIAL USE ONLY INTERNATIONAL 3-MONTH WtdnisJoy MONEY MARKET YIELDS EURO-DOLLAR figures DEPOSIT VS. FOR EUR O-OOIUR DEPOSIT - (Tvv 1 U.S. DOLLAR CERTIFICATE / , OF I \ I INVESTORS DEPOSIT Per ( m l pif annum J - r—i - U.S. CEKTI HCATE OF DEPOSIT V - DIFFEREIs F R O - D O L LAR 0 V I :RJ - - y \ NEW YORK OFFER _F r i d a y f i g u r e s Vvy w n ^ J \ J 1 11 ' RATES ON 1 1 1 1 II SELECTED 3-MONTH TREASURY B I L L S - F u l l y COMMERCIAL P APER-Fully INVESTMENTS Hedged H.dg.T INTEREST ARBITRAGE, Friday figures* 3 - TH UNITED STATES / C A N ADA t • nf m i TR E A S U RY annum 1 1 B LL R>^ T E S j - 1 1J ... I III! I ! ! 1 I BILL | CANADA RATE MONTH ^ w 1 l7 , 1 UNITED STATES n r n ., DIFFERENTIALANDFORWARD COVERED RATE 1 1 1 1 1 1 1 1 1 1 1 1 1 1 CANADIAN DIFFERENTIALS (NET DOLLAR INCENTIVES) FAVOR CANADA INTEREST ARBITRAGE, NEW Y O R K / L O N D O N 3 - MONTH TREASURY BILL RATES A *ATE D I F F E : R E N 1• | A L / ( N D ^ I F O R W ARD 1 :3 - M O N T H STER LING SR B E A D 1 N M O B O F T ( - 1 ^ 1 1 X h r / 'V/-. J X I I JJ 1 ' " N | 1 I I I I I | I | 1 1 1 1 1 1 1 1 1 1 1 1 I K I I I 1 L 1 RATE DIFFERENTIAL WITH FORWARD EXCHANGE COVER (NET INCENTIVE) 1 1 I N T ER E S T A R B I T R A C E 3-MONTH FO R G E R M A N TREASURY EURO-DOLLAR BILLS, DEPOSIT CO MM ERCIAL INTERBANK RATES ] LENDING BA NKS RATE R I AND — R - V RATE DIFFERENTIAL AND FORWARD DEUTSCHE MARK "—^ ~/V^V V, i v/| i I j I T RIASU R Y SILLS I RATE i i ! DIFFERENTIAL WITH i i FORWARD r T. EXCHANGE . COVER . (NET . . INCENTIVE) VVl IN f l V O R O f L O N D O N t U R O - D O U A R S 1963 1964 196 5 S H O R T . T E RM J I N T B R E S T v R A T E S * | CANADA "X" 3"monih trcosury bill rotes (or all countries except Japan (Avuraye role on bonk loom and d n c o u n h ) and Switzerland (3 month deposit rote) I LONG-TERM BOND YIELDS P.r KJ j cent per onnu INDUSTRIAL STOCK INDICES • •lie s<al« S ~ w CANADA —rj. * * J o p a n index of 2 2 5 induslriol and oiher stocks iruded on I h e Tokyo exchange Chert 8 SPOT EXCHANGE RATES - M A J O R CURRENCIES AGAINST SWISS FRANC GERMAN MARK U.K. STIRLING FRENCH FRANC DUTCH GUILDER A ' I ITALIAN LIRA CANADIAN DOLLAR J A P A N E S E YEN I U.S. DOLLAR 3 _" M °N T H FORWARD EXCHANGE RATES Fndoy figures AGAINST U.S. DOLLARS P. GERMAN MARK i SWISS FRANC DISCOUNT - AGAINST POUND STERLING , - LONDON SWISS (BANC AGAINST POUND ! STERLING BELGIAN FRANC 1963 - LONDON i DUTCH GUILDER 1964 1965 H.13 March 3, 1965 No, 182 III, Latest Figures Plotted In H.13 Chart Series, 196*3 Per cent per annum Chart 1 Upper panel (Wednesday, Feb, 2h (Friday, F e b . 26 , except as noted) ) Ua 62 Euro-$ deposit U.S. certif. of deposit Treasury !u2£ Lower panels (Friday, Feb, 26 Treasury bills: ) U.S. 6.29 Germany 3.12 Canada 3,67 Canada Euro-$ deposit (London) L^6 Japan: composite rate (Date: Nov, 27 ) 7.990 U.S. k*25 Canada k*& Chart 6 LAO Bonds: Feb, 26 U. S. govt. (Wed. Feb. 2h ) Canada 3,67 U.S. 3,97 Spread favor Canada -0.30 Forward Canadian dollar Net incentive (Canada +) 0.00 -0,30 Chart 3 Feb, 26 Treasury bills: U. K. JL2Z Chart 2 (Friday, 3.97 Swiss 3-month deposits (Date: Jan, 15 ) Hire-purchase paper, U.K. Treasury bills: bills: U.S. U.K. Finance Co. paper: (Friday, Per cent per annum Chart 5 ) U.K. U.S. 6.29 iul9 6.L6 25 German Fed. Railway (Fri. Feb, 19 ) 6^9 Swiss Confederation (Fri. Feb. 12 ) ll-OLt Canadian govt. (Wed. Feb. ) 10 Netherlands government perpetual (Fri,, Feb, 19 ) 3.97 Spread favor U.K. +2,32 Forward pound -2,82 Net incentive (U.K. +) -0,50 Digitized forFor FRASER description and sources September 23, 1964. U. K. war loan (Thurs., F e b , ) of data see special annex to H. 13 Number 164,
@FedFRASER