Full text of H.16 Capital Market Developments : August 29, 1960
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Not f o r Publication BECOMHOIiED a f t e r s a toHTHg H.lli August 29, I960. 'V: AUG;'-'"" BDSUjr- } C? RiCl!. l ~" 1 : j I G&EHALMARKET DEVELOPMENTS IN THE UNITED STATES AND CANADA. P a r t I - United S t a t e s "" Two l a r g e corporate s e c u r i t y i s s u e s with aggregate proceeds of $75 m i l l i o n and t h r e e l a r g e S t a t e and l o c a l government bond i s s u e s t o t a l i n g $78 m i l l i o n were s o l d during the week ending August 26. This week only one corporate debenture i s s u e f o r $125 million—Republic S t e e l Corporation—and one St a t e and l o c a l government, bond i s s u e f o r $13 million a r e scheduled f o r s a l e . long-term bond y i e l d s - Yields on long-term corporate and S t a t e and l o c a l government bonds declined f u r t h e r l a s t week t o new lows f o r t h e y e a r , while y i e l d s on U. S. Government long-teim bonds were s t a b l e . S h o r t - and intermediate-term i n t e r e s t r a t e s - Yields on Treasury b i l l s rose l a s t week while y i e l d s on I n t e r a e d i a t e - t e r m government bonds d e c l i n e d . Both t h e prime r a t e and t h e r a t e on c a l l loans secured by stock exchange c o l l a t e r a l were reduced from 5 per cent to i i - l / 2 p e r cent by New York banks. The r a t e quoted f o r 3- t o 6-month d i r e c t l y - p l a c e d f i n a n c e company paper was unchanged. Mortgage recordings - Mortgage recordings rose about seasonally i n June. As in May, they were about one-tenth lower than a y e a r e a r l i e r but higher than i n the corresponding month of any e a r l i e r y e a r . In t h e f i r s t half of t h i s year recordings t o t a l e d $Ll|.2 b i l l i o n , compared with $15.7 b i l l i o n in t h e f i r s t half of 1958, and $13.9 b i l l i o n in t h e f i r s t h a l f of 1955. Stock p r i c e s - Common stock p r i c e s , a s measured by Standard and P o o r ' s index of 500 stocks, increased l a s t wedc, closing a t 57.60 on Friday, an i n c r e a s e of .59 p o i n t s . Trading volume averaged 3 . 1 m i l l i o n shares a day, t h e h e a v i e s t since June. More d e t a i l e d i n f o imation concerning recent capital- market developments i s presented i n t h e a t t a c h e d e x h i b i t s . Developments i n t h e Canadian c a p i t a l markets a r e presented i n Part I I a t the end of t h i s r e p o r t . Capital Markets S e c t i o n , Division of Research and S t a t i s t i c s , Board of Governors of the Federal Reserve System. L O N G - T E R M B O N D YIELDS HIGH-GRADE V\z i i LOWER-GRADE r \ -3- Exhibit B - Tables f o r Exhibit A Long-term Bond Yields Higi-grade H.Ik Date Corporate Aaa 1/ Spread between U. S. Govt, and Corporate IState and l o c a l Aaa" S t a t e and l o c a l govt. Aaa y U. S. Govt, long-term 2 / (Per cent) 1951* 1957 1958 1959 - Low High Low High Low 1960 - High Low l*.6l 1.09 1.61 1*.23 July Aug. Aug. Aug. Aug. U-38 h.3k k.30 b.26 h.23 29 5 12 19 26 g / 2.1*5 ( 8 / 6 ) 2.85 (lt/23) lull* (9/27) 3.76 (10/18) 3.07 1*.37 3.83 h.U2 3.75 3.55 (5/2) (12/31) (1/9) (1/29) (8/26) I3.06 (3/26) * (V25)v (12/31) (1/2) (1/8) (8/5) - 3.53 (1/7) 2.99 (8/25) 3.28 3.22 3.11 z/3.03 2.99 3.81 3.75 3.78 3.81 3.81 .30 .60 .22 .50 .16 .59 .19 .30 .1*7 .31* .92 ,53 .92 .53 .57 .59 .52 .16 .1*2 .53 .53 ,6h .79 .82 Lower-grade Date Corporate Baa 1 / S t a t e and l o c a l govt. Baa 2 / Spread between Aaa and Baa S t a t e and Corporate l o c a l govt. (Per cent) 1951* 1957 1958 1959 Low High Low High Low 1960 - High Low July Aug. Aug. Aug. Aug. - 295 12 19 26 2 / 3.1*1* (12/31) 5.10 (13/29) li.51 (7/11) !-i I5S i:S 5.11 5.06 5.03 " . 2.93 (8/S) ahi 3.92 (3/26) 1.1*6 (1/7) L 0 5 (8/25) ,k.2$ k.2h it. 21 i+.ll 1*.05 .52 1.27 .77 .*56 -.81* .71 .81 .80 .80 .96 1.21 . , •98 .79 1.09 .92 .97 1.02 1.07 1.09 1.06 g/ Preliminary. y Weekly aver#** ef dally figures. Average tare of bgnda Included 1» 25-26 y w r i . 2/ Weekly average of dully figures. The series includes bonds due or callable in 10 years or more. 3/ Thursday figures. Only general obligation bonds are Included, average term I s 20 years. Note.—Highs and lews are for Individual series and may be en different dates for different eeriee. SHORT- AND INTERMEDIATE- TERM INTEREST RATES GOVERNMENT T - MOUTH I I U S PRIVATE Mil LOAHS Exhibit D - Tables f o r Exhibit C -5- Short- and Intermediate-term I n t e r e s t Rates Government Discount rate 1/ Date 3-month b i l l s 2/ Yields 6-month b i l l s 2/ 3-5 y e a r issues 2/ Spread between y i e l d s on 3-month b i l l s and y i e l d s on 6-mo. b i l l s 13-5 y r . i s s u e s " (per cent) 195U 1957 1958 1959 - Low High Low High Low 1960 - High Low 1.50 3.50 1.75 I4.00 2.50 Loo 3.00 July Aug. Aug. Aug. Aug. 3.50 3.50 3.00 3.00 3.00 29 5 12 19 26 q / • 6l 3.61 .58 1.57 (6/ll) --(10A8) — (5/29) 3.02 (12/26) (12/26) lt.91 (12/31) 2.63 " " (2/20) 2.92(1/2) li.59 (1/8) 2.13 (8/5) 5.07 (1/8) 2.39 (8/5) 2.2k 2.13 2.56 2.39 2.1*8 2.66 2.70 2.18 2.31 2.13 1.66 l*.0l* 2.11* 5.00 (V30) (10/18) (6/7) (12/21*) 3.70(1/2) li.97 (1/8) 3.^7 (8/26) 3.51; 3.k9 3.52 1/3.52 3.1:7 .66 .26 .86 .01* .79 .19 .58 .16 1.1*2 .liO 1.81 " .38 .32 1.30 1.36 1.3k 1.22 1.0k .26 .JO .35 .27 Private Date Stock Exchange c a l l loan 1 / Spread between 3-month Prime Finance company Treasuzy b i l l y i e l d and rate 1/ f i n a n c e company paper ] / paper r a t e s ( p e r cent) 1951* 1957 1958 1959 - Low • High Low High Low i960 - High July Aug. Aug. Aug. Aug. Low 3.00 lt.50 3.50 4.75 3.75 5.50 li.5o 3.00 i*.5o 3.50 5.00 1*.00 5.00 1|.50 1*.88 3.00 5.13 2.9k 29 5 12 19 26 g / 5.oo 5.oo 5.oo 5.oo - L5o 5.oo 5.oo 5.00 5.oo L5o 2.9k 2.9k 2.9k 2.9k 2.9k 0 (12/18) 1.25 3.88 1.13 w .59 (7/19) - . 3 5 (8/29) .86 (10/9) .13 (12/1*) 1.02(3/25) .22 (1*/15) .70 .81 .51 1/ Weekly rate shown Is that l a effect at end of period. Discount pate Is for Federal Reservs Bank of New York. Stock exchange call loan rate I s going rate on call loans secured ty customers' stock exchange collateral at New York City banks. Prime rate Is that charged by large banks on short-term loans to business borrowers of the highest credit standing. y Market yield; weekly averages computed from dally cleslng bid prices'. Series of 3-5 year Issues consists of seleoted notes and bonds. 3/ Average of dally rates published ty finance companies for dlreotly placed paper for varying maturities In the 90-179 day range. Note.—Highs and lows are for individual series and may be on different dates for different series. Per spreads, Digitized for nighFRASER refers to widest, and low to narrowest. STOCK MARKET MORTGAGE RECORDINGS AND LOANS E x h i b i t F - Tables f o r E x h i b i t E -7- Stock Market Stock p r i c e index 1 / Date 1957-59 - High Low i960 - High Low 60.51 39.78 59.50 5k. 2k June July Aug. 12 Aug. 19 Aug. 26 p / 57.26 55.8k 56.66 57.01 57.60 Trading Common volume y stock yields 2/ (millions ( p e r c e n t ) of s h a r e s ) (7/31/59) (12/27/57) (1/8) (3/11) Stock market customer c r e d i t Customers• Bank debit b a l - loans to ances k / " o t h e r s " 5 / C l i i : Lions of do]Liars) Total 3.07 It.66 3.18 3.51 k.3 l.k 3.9 2.h l|,761t 3,551) It, 365 . It, 132 3,k01 2,482 3,198 3,00k 1,373 1,060 1,167 1,111 3.35 3.U5 3.k2 3.a 3.38 3.5 2.7 2.9 2.7 3.1 1|,2H| L,133 n.a. n.a. n.a. 3,082 3,00k n.a. n.a. n.a. 1,132 1,129 1,125 1,127 n.a. n . a . ~ N o t available. g / Preliminary. 1/ Standard and Poor's composite Index of 500. oomnon atooka, weekly closing prices, 1941-43=10, Monthly data are averages of daily figures rather than of FVldays' only. Highs and lows are for Fridays' data only. 2/ Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prices by Federal Reserve. Yields shown are for dates on which price Index reached i t s high or low. 3/ Averages of daily trading volume on the New York Stock EScoliange. 4 / End of month figures f o r member f i r e ? of the New York Stock Exchange which carry margin accounts; excludes balences secured by U. S. Government obligations. 5/ Wednesday figures for weekly reporting member banks. Excludes loans for purchasing or carrying U, S. Government securities* Prior to July 1, 1959, such loans are excluded only at banks in New York and Chicago. Weekly reporting banks account for about 70 per.oent of loan# to others. For further detail see Bulletin. Nonfarm Mortgage Recordings and Loans 1 / Date Total Seasonally Unadjusted adjusted 2/ Unadjusted FHA Conv. -VA. (Millions of dollars) 1959 - June July August September October November December 1960 - January February i larch April hay June 2,760 2,767 2,769 2,650 2,639 2,589 2,1(65 . 2,1(67 :;Z 2,k00 2,kk6 n.a. 2,97k 3,100 2,871 2,83k 2,799 2,kk2 2,k67 2,079 2,149 2,k06 2,366 2,500 2,690 521 52k 50k 510 523 kk8 k5l kl7 368 361 #6 322 365 221 227 202 221 238 220 2kl 195 170 173 153 155 175 , 2,233 2,3k&2,165 2,103 2,039 1,775 1,79k l,k67 1,612 1,872 1,878 2,023 2,150 n.a.—Not available. / 1/ Total rocordlngs data are estimates based on reports from about 450 areas and include mortgages of $20,000 or less secured by nonfarm real e s t a t e , primarily residential properties. FHA-lnsured loans represent gross amount of insurance written, and VA-guaranteed loans the gross amount of loans closed,on 1-4 family houses. Conventional data are derived as a residual, although t o t a l recordings and VA and PHA loans are not s t r l o t l y comparable In concept or timing. 2/ Three-month moving average, seasonally adjusted by Federal Reserve. Sources Federal Home Loan Bank Board, Federal Housing Administration and Veterans Administration. for FRASER Digitized Exhibit G Long-term Corporate and S t a t e and Local Government S e c u r i t y O f f e r i n g s and Placements ( I n m i l l i o n s of d o l l a r s ) New c a p i t a l I960 January February March Corporate 1 / 1 1959 1 I960 728 736 623 575 63? 858 61*6 812 953 511 932 798 895 551 577 715 860 821 738 6b6 1,5532/ April May 766 567 1,03k 891* 785 887 i,i4o 597 887 729 551 E/970 July August September e/800 e/925 535 740 703 1,107 540 1,114 S/550 1/550 879 86^ 900 862 518 920 2,204 2,567 3,139 2,623 2,760 2,300 October November December 1st 2nd 3rd 4th quarter quarter quarter quarter 1st half Three q u a r t e r s Year 2.151 2,367 s 4,519 s 9,392 e and l o c a l 2/ 1 1958 1959 1956 5,762 8,522 10,823 1,93)4 E/2,249 V^IM 465 806 403 651 t ! It55 456 474 435 u : 1,571 2,276 2,21,1* 1,860 1,365 4,674 6,222 7,793 4,520 6,380 7,746 2,143 Excluding f i n a n c e companies 4 / 1st 2nd 3rd hth quarter quarter quarter quarter 1,722 e/2,067 Year 1/ 2/ 3/ h/ 1,999 2,412 1,716 2,503 2,899 2,586 2,731 2,213 8,630 10,1*29 g / Preliminary. S e c u r i t i e s and Exchange Commission e s t i m a t e s of n e t proceeds. Investment Bankers Association of America e s t i m a t e s of p r i n c i p a l amounts. Includes $718.3 m i l l i o n AT&T c o n v e r t i b l e debenture i s s u e . T o t a l new c a p i t a l ,is sues excluding o f f e r i n g s of s a l e s and consumer f i n a n c e companies. H.U Exhibit H Other S e c u r i t y O f f e r i n g s 1 / ( I n m i l l i o n s of d o l l a r s ) Long-tern Foreign government 2 / Federal apency 3 / I960 1959 1 1958 I960 I1 1 1959 JanuaryFebruary March April May June 17 $ 70 81 60 2 196 53 33 72 1*0 • 58 50 1*2 139 198 120 85 1 35 9 5 17 33 30 70 58 123 74 86 5U7 992 707 * July August September October November December Year — .182 150 150 April May July August September 1958 1,163 251 175 11+8 351* . 523 — — 16U 98 150 — 220 Short-term S t a t e and l o c a l government h/ January February March 199 — 2,321 Federal agency 3J 268 3h£ 365 190 128 295 233 1*60 273 1*79 I463 512 359 500 1*89 371 208 ll* 4 365 . 351 297 563 1*11 215 357 354 26h 509 632 435 486 675 289 209 161 329 207 21t6 1*67 399 289 123 369 312 727. 365 665 1*37 206 330 235 3h3 358 ?31 hlS 2l*3 733 1*71 288 1*51* 111* 137 li,179 3,910 6,01*7 October November December Year 3,090 E/ PrelUilrnry. 1/ Data presented i n t h i s exhibit d i f f e r from those i n Exhibit E i n t h a t refunding l s s u n s , an well a s new c a p i t a l iS3UQ8j ere included. Long-term s e c u r i t i e s are dn fined as those matwi.ng in m^ra thar. one y e a r . 2 / Inoludos s e c u r i t i e s offered i n the United States by foreign governnents and t h e i r subdivisions end by in'.ernntlonnl organisations. "-oureos S e c u r i t i e s ami Exuhr.nge Commi«*lor:. y Isaues not gunreM*ad by the U. S. Govtrn-ier.:.. Sourcei long-tern, S e c u r i t i e s and Exchange Corailaslonj short-term, Federal Reserve. 4 / P r i n c i p a l l y tax and bond a n t i c i p a t i o n not*s, warrants or c e r t i f i c a t e s ar.d Public Housing Authority not»». I n some instances PHA r.»tee included may have a somewhat longer tftui than one year. Sourcei Bond Buyer. Exhibit I —10— Large Long-term Public Security I s s u e s f o r New Capital (Other than U, S. Treasury) 1 / Proceeds of Large I s s u e s Offered (Millions of d o l l a r s ) Month Corporate S t a t e and l o c a l government 110 363 199 400 121 230 279 262 381* 309 139 442 303 1959 - July August September October November December I960 - January February March April. May June July 194 263 214 294 163 217 388 283 225 370 234 561 191 Other 2 / *0 98 17$ 20 70 100 320 191 71 28 30 Largo I n d i v i d u a l Issues Offered August 1 through 26 Issuer Type y Coupon Amount (millions rate or Offering Maturity n e t i n t e r - y i e l d Rating of dollars) e s t cost CORPORATE Southwestern Bell T e l . Co. Deb. 100.0 Texas ha s t e m Trans. Corp. "S.F. deb. 25.0 El Paso Natural Gas Co. Com.' s t k . 33.0 Consumers Power Co. Conv. deb. 38.1 Michigan B e l l Telephone Co. Deb. 35.0 General Motors Accept.Corp. Deb. 150.0 Southern C a l i f . Edison Co. 1st r e f . m t g . b d s . 6 0 . 0 McKesson & Robbins, Inc. Deb. 15.0 1995 1980 4-5/8 5-3/8 4.55 5.38 Aaa Ba 1975 1996 1982 1985 1980 1-3/8 4-5/8 4-5/8 4-3/8 4-5/8 4.38 4.53 4.68 4.38 4.61 Aa Aaa —— Aa A STATE AND LOCAL GOVERNMENT Chesapeake Bay Bridge and Tunnel Commission " Los Angeles Co., C a l i f . State of C a l i f o r n i a Rev.-Ut. Rev.-Ut. Rev.-Ut. G.O. 0.0. 70.0 30.0 81.3 11.0 15.0 2000 2000 2000 I96I-8O 1905-90/85 5.62 5.62 5.62 3.31 3.31 4.88 5.50 5.75 1.70-3.45 2.40-4.00 Aa Aa 1-2 -11- Large i n d i v i d u a l I s s u e s Offered August 1 through 26 (Cont'd) Issuer Type U Coupon Amount Offering r a t e or (millions Maturity n e t i n t e r - y i e l d of est cost dollars) Rating STATE AND LOCAL GOVERNMENT (Cont'd) G.O. State of Vermont S t a t e of Washington Rev.-S.T. East Bay Mun. U t i l . D i s t . , Calif or nia G.O. 13.7 3L0 1962-80 1961-80/70 2a.6£ 3.59 1.30-2.80 1.70-3.70 Aaa A 30.0 1961-95/75 3.30 1.50^3.95 Aa 75.0 1971 lt-1/8 OTHER Fed. Nat. Mtg. Assoc. 1/ 2/ J/ Deb. it. 10- — Includes coiporate and o t h e r s e c u r i t y o f f e r i n g s of million and over; S t a t e and l o c a l government s e c u r i t y o f f e r i n g s of $10 m i l l i o n and over. Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and Development i s s u e s and non-guaranteed i s s u e s by Federal agencies, In t h e case of S t a t e and l o c a l government s e c u r i t i e s , G.O. denotes general obligations5 Rev.-Ut., .yevenue- o b l i g a t i o n s secured only by income from p u b l i c u t i l i t i e s 3 Rev.-Q.Ut. / revenue bonds secured only by revenue from q u a s i u t i l i t i e s j Rev.-S.T., revenue bonds secured by revenue from s p e c i f i c t a x e s only; Rev.-Rent., revenue bonds secured s o l e l y by l e a s e payments. Exhibit J -12- Forthcoming Large Long-term P u b l i c S e c u r i t y O f f e r i n g s f o r New C a p i t a l (Other t h a n U. S. T r e a s u i y ) 1 / Expected Proceeds from Forthcoming Large I s s u e s Date of computation During month f o l l o w i n g d a t e shown S t a t e and Corporate Other 2 / l o c a l govt. 1959 - J u l y 31 Aug. 31 Se p t. 30 Oct. 30 Nov. 30 Dec. 31 - Jan. 29 Feb. 29 Mar. 31 Apr. 29 May 31 June 30 J u l y 29 238 198 37k 385 226 210 207 301 299 202 1*83 237 596 356 385 270 115 295 kk$ 210 255 250 243 277 180 275 Subsequent t o date shown S t a t e and Coiporate Other 2 / local govt. 305 517 69k 569 271 280 252 372 3Wi 25 70 30 b$ 35 30 30 — J|06 102 k70 336 185 70 % ^5 35 SUB 280 258 502 380 32k 8 1,006 25 60 30 Forthcoming Large O f f e r i n g s , a s of August 26 Issuer Type Amount Approximate d a t e (millions of o f f e r i n g I of d o l l a r s ) CORPORATE Republic S t e e l Corp. V i r g i n i a E l e c t r i c & Power Co. P u b l i c S e r v i c e Co. of Colorado Utah Power & L i f h t Co. xPublic Service E l e c t r i c and Gas Co. P a c i f i c Power & L i g h t Co. Union E l e c t r i c Co. American Telephone & Telegraph Co. •^Columbia Gas System T r u s t o r s ' Corp. Commerce C i l R e f i n i n g Corp. L i b e r i a n Iron Ore, L t d . N a t u r a l Gas P i p e l i n e of America N a t u r a l Gas P i p e l i n e of America Deb. 1 s t r e f . mtg. b d s . Pfd. s t k . 1 s t mtg. b d s . 1 s t r e f . mtg. b d s . 1 s t mtp. b d s . 1 s t mtg. b d s . Deb. Deb. Partic. certif. Deb., bds. & com. Bds. & s t k . 1 s t mtg. b d s . . Pfd. stk. 125.0 25.0 15.0 Aug. 31 Sept. lb S e p t . 15 Sept. 15 S e p t . 21 S e p t . 22 Oct. 19 Oct. 25 October Indefinite Indefinite Indefinite Indefinite Indefinite 12.7 Aug. 30 16.5 i5.o Sept. 7 Sept. 7 25.0 15.0 16.0 50.0 20.0 50.0 250.0 30.0 1*0.0 45.0 30.0 STATE AND LOCAL GOVERNMENT A t l a n t a , Georgia Alameda-Contra Costa T r a n s i t L i s t . , California -"-Alabama Highway A u t h o r i t y Rev.-Ut. Rev. $ ,:$ J-2 -13- Forthcoming Large O f f e r i n g s , a s of August 26 (Cont'd) Issuer Type Amount Approximate date (millions of.offering of d o l l a r s ) STATE AND LOCAL GOVERNMENT (Cont'd) New York S t a t e Thraway Auth. City & Co. of San Francisco, C a l i f . Pa. S t a t e Highway & Bridge Auth. State of Ohio Public Housing A u t h o r i t i e s Milwaukee, Wisconsin ^ B u f f a l o , New York Eev.-Ut. G.O. Rev.-Ut. G.O. ; G.O. G.O. G.O. 50.0 21.5 10.0 31.0 1*8.9 10.8 U2.3 Sept. Sept. Sept. Sept. Sept. Sept. Sept. 8 12 13 13 lit 20 22 OTHER None *—Included i n t a b l e f o r f i r s t time. 1/ Includes corporate and o t h e r i s s u e s of $15 m i l l i o n and over; S t a t e and l o c a l government i s s u e s of $10 m i l l i o n and over. 2 / Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and Development i s s u e s and non-guaranteed i s s u e s by Federal agencies. Note.—Deletions f o r reasons o t h e r than s a l e of i s s u e : None. Exhibit K -ill- Yields on New and Outstanding E l e c t r i c Power Bonds, Rated Aa and A 1/ Aa-rated o f f e r i n g y i e l d s A-rated o f f e r i n g y i e l d s Amount above Amount above Actual Actual ( p e r cent) seasoned y i e l d s (per cent) seasoned y i e l d s ( b a s i s points) ( b a s i s points) Date 1952-1959 - High Low 1959 - July Aug. Sept. Oct. Nov. Dec. 1960 - Jan. 7 Feb. 25 26 Mar. 15 16 18 29 Apr. 6 8 lit 21 27 May 10 12 25 June 17 28 29 July 8 13 5.30 (12/8/59) 2.93 (3/31/510 . 87 -3 *4.93 4.83 31 23 5.13^/ *5.08 *5.30 36 42 63 5.08 5.10 44 46 » 8 it. 85 33 lt.9lt 39 lt.95 lt.88' 39 32 U.82 . it. ait 25 27 5.65 (9/18/59) 3.00 (3/17/54) 123 -15 5.07 *5.65 5.33 17 . 60 43 5.45m/ 5.30=/ 51 28 5.00 4.93 11 7 4.98 21 5.30 50 5.10 5.20 4.95 26 33 11 4.93 4.88 11 8 ' *—Single observation, not an average. 1/ Covers only 30-year f i r s t mortgage bonds, as reported in Moody's Bond Survey. Except where indicated, t h e a c t u a l y i e l d f i g u r e and the amount above seasoned y i e l d s a r e averages of o f f e r i n g s during the indicated period and of the d i f f e r e n c e s between these new o f f e r i n g y i e l d s and y i e l d s on seasoned issues of similar q u a l i t y f o r the same day. Average maturity f o r the seasoned issues v a r i e s from 26 t o 28 years. 2/ Provides f o r a 5-year period during which issue may not be called f o r refunding a t a lower coupon r a t e . Monthly averages so marked include one or more i s s u e s with such a provision. Other issues have no such provision. August 29, I960 P a r t II-Canada -15- A f u r t h e r s u b s t a n t i a l d e c l i n e l a s t week i n Canadian Treasury b i l l y i e l d s brought Canadian y i e l d s t o t h e i r lowest l e v e l since mid-1958• They were a l s o below comparable y i e l d s i n the United S t a t e s f o r the f i r s t time since l a t e May, The y i e l d on 3-month b i l l s has declined by 66 b a s i s p o i n t s i n the p a s t two weeks; i n t h i s p e r i o d t h e Bank of Canada.has been a small s e l l e r of b i l l s , the chartered banks have been s u b s t a n t i a l buyers and the general public s u b s t a n t i a l s e l l e r s . During t h e p a s t week, bond y i e l d s f e l l g e n e r a l l y , with intermediate m a t u r i t i e s showing drops of 20 t o 28 b a s i s p o i n t s . With i n c r e a s e s i n United0 S t a t e s i n t e r e s t r a t e s , the spread between Canadian bond y i e l d s and U.S. y i e l d s narrowed s u b s t a n t i a l l y . The spot Canadian d o l l a r moved up f r a c t i o n a l l y during the week. Honey market c o n d i t i o n s . At l a s t Thursday's a u c t i o n , t h e average y i e l d on the 3-month Treasury b i l l again dropped s h a r p l y by hi b a s i s p o i n t s t o 2.25 per c e n t p e r annum from 2.66 p e r cent a week ago (see Table)o This i s the lowest y i e l d s i n c e September 1958. The y i e l d i s now I4.O b a s i s p o i n t s below i t s former low f o r the year i n l a t e May. The 6-month b i l l y i e l d a l s o declined t o i t s low f o r i960 of 2.UU per cent per annum from 2.89 per cent the previous week. The chartered banks purchased |2U m i l l i o n of Treasury b i l l s and t h e general p u b l i c sold $lU m i l l i o n and the Bank of Canada sold $6 m i l l i o n . The average c l o s i n g r a t e on day-to-day loans decreased t o 2.58 per cent p e r annum from 2.98 p e r cent l a s t week. The n e t i n c e n t i v e t o hold t h e Canadian s h o r t Treasury b i l l on a covered b a s i s disappeared during the week; i n s t e a d t h e r e i s now a n e t i n c e n t i v e of 0.2U per cent per annum i n f a v o r of the U.S. b i l l . During the week, t h e y i e l d on t h e Canadian b i l l f e l l by U5 b a s i s p o i n t s and the U.S. b i l l y i e l d rose by 10 b a s i s p o i n t s . There was no premium or discount on the 3-month forward Canadian d o l l a r . Acceptance companies have again reduced t h e i r r a t e s on s h o r t term c o l l a t e r a l t r u s t notes by 0 . 2 5 per cent per annum. A s i m i l a r cut was made during the f i r s t week of August. The new r a t e s being paid by leading firms a r e : Maturity 30-89 days 90-179 180-269 270-36U Rate (per cent) 3 3-lA 3-1/2 3-3A Bond market. Bond y i e l d s declined g e n e r a l l y through t h e week with t h e intermediate range m a t u r i t i e s r e g i s t e r i n g drbps of as much as 28 b a s i s p o i n t s . The general p u b l i c sold m i l l i o n of bonds and $6 m i l l i o n of savings bonds. The spreads between s e l e c t e d comparable Canadian —16— and United S t a t e s s e c u r i t i e s (Thursday y i e l d f o r b i l l s and Wednesday y i e l d f o r bonds) were a s f o l l o w s ( f i g u r e s i n p a r e n t h e s e s r e f e r t o t h e p r e v i o u s week): -0.2k -0.3$: 0.69 loOO 1,15 per per per per per cent cent cent cent cent on on on on on a 91-day b i l l ( 0 . 2 8 ) a 182-day b i l l ( 0 . 1 7 ) an 8 - y e a r bond ( 0 . 8 5 ) a 20-year bond ( 1 . 0 9 ) a 35-year bond ( 1 , 2 0 ) O f f e r i n g - of t h e 1959 s e r i e s of Canada s a v i n g s bonds w i l l end August 31, Finance M i n i s t e r Fleming has announced. Current p r i c e i s 10U.15, m a i n t a i n i n g t h e U.98 p e r c e n t y i e l d t o m a t u r i t y . There i s a 3 p e r c e n t t a x f r e e bonus on bonds h e l d t o m a t u r i t y . The C i t y of Montreal i s o f f e r i n g $5,1 m i l l i o n of 2 0 - y e a r s e r i a l d e b e n t u r e s . Minimum t e n d e r p r i c e on August 30 i s 95 on an i n t e r e s t r a t e range between U and 5»5 p e r c e n t . Proceeds w i l l be used t o r e p a y bank advances. Over t h e p a s t twelve months, Canadian y i e l d s have d e c l i n e d g e n e r a l l y ( s e e T a b l e ) . Since August 1959, t h e y i e l d on T r e a s u r y b i l l s has f a l l e n by over 3 p e r c e n t . From t h e i r h i g h s i n March I 9 6 0 , bond y i e l d s have d e c r e a s e d by U5 t o 9U b a s i s p o i n t s . The United S t a t e s T r e a s u r y b i l l y i e l d over t h e l a s t y e a r f e l l by 1 , 1 1 p e r c e n t . The y i e l d of l o n g - t e r m bonds h a s h e l d s t e a d y b u t t h e i n t e r m e d i a t e and s h o r t m a t u r i t i e s have d e c l i n e d over t h e p a s t f o u r months by 2h t o 52 b a s i s p o i n t s . Canadian Government, p r o v i n c i a l , m u n i c i p a l and c o r p o r a t i o n p u b l i c bond f i n a n c i n g i n Canada f o r J u l y amounted t o n e a r l y $90 m i l l i o n , o f f over UO p e r c e n t from J u l y 1959, However bond f i n a n c i n g over t h e f i r s t seven months of I960 was up 95 p e r c e n t over t h e same p e r i o d i n 1957, This i n c r e a s e was p r i n c i p a l l y i n t h e Canada d i r e c t and g u a r a n t e e d b o n d s . Exchange r a t e . During t h e week, t h e Canadian d o l l a r s t r e n g t h e n e d t o 103.203 (U.S. c e n t s ) on Thursday f r o m 103,125 t h e week b e f o r e ( s e e T a b l e ) . During t h e week t h e r e was a s l i g h t premium b u t by Thursday i t had disappeared. Stock exchange. P r i c e s of i n d u s t r i a l s t o c k s on t h e Toronto index i n c r e a s e d by a b o u t 6 p e r c e n t from August 18 t o 23 w h i l e over t h e same p e r i o d t h e Montreal index gained about it p e r c e n t . New York Toronto Montreal Standard & Poor January U March 1 May 2 July 5 August 2 18 19 22 23 532.58 U9U.71 U8U.6O U85.50 475,06 U93o63 1*96.25 U96o88 U99o50 318.9 290.6 280 0 9 272,0 259.3 269,3 271,3 273,4 273,6 64.50 59,83 57,59 60.65 58.Ul 60.26 60.15 60.65 61.31 Selected Canadian Money Market and Related Data ( 3-mo • Treas. bills Spread Canada over U.S. ' 1959 - High Low i960 - High Low Aug. 3 11 18 25 6.16 . 3.25 2.25 U.U9 2.80 U.63 2.15 2.96 0.30 0.90 -0,69 2.83 2.91 2.66 2.25 2.15 2.21; 2.38 2.U9 0.68 0.67 0.28 -0.2U Spot Canadian dollar 3-mo# discount ( - 1 forward premium(+)d/ 105.51 1012,58 105.27 101.31 - - 102.75 103.31 103.13 103.20 102.75 103.33 103.13 103.20 Net incentiVB to hold Can. bills/ 0.31 -0.72 0.9U -0.57 0.0 0.06 0.68 0.73 0.28 -0.2U a/ Average yield at weekly tender on Thursday. — — — %/ Composite market yield for the U.S. Treasury bill on Thursday close of business, c/ In U.S. cents. 3/ Spread between spot rate and 3-month forward Canadian dollar on Thursday closing, expressed as per cent per annum. e/ Spread over U.S. Treasury bill (column 3), plus 3-month forward discount or premium (column 6). Selected Government of Canada Security Yields 6-mo. Treas. bills Spread Canada 1959 - High Low I960 - High Low 6.2k 5.11 5.33 2.UU Aug. 3 10 17 2h 3.05 3.13 2.89 2.16 M W 0.85 -0.69 5.37 U.50 5.55 U.U5 loll 0.21 0.65 0.58 0.17 -0.35 U.53 U.5U U.U5 U.25 0.9U 0.96 0.85 0.69 J Long-term bonds (20 year) (35 year) Spread Spread Canada over Canada m J L Intermediate bonds (8 yr.) Spread Canada JJTI/ a • 5.30 U.UU 5.U2 U.85 1.22 0.87 U.85 U.89 U.87 h.77 1.1k l.lU 1.09 1.00 ' 5.05 u.73 5.28 U.85 1.61 0.98 U.85 U.90 U.86 • U.83 1.25 1.29 1.20 1.15 Average yield at weekly tender on Thursday. . Spread between Canadian auction rate and composite market yield of U.S. on close of business Thursday.. c/ Government of Canada 2-3A per cent of June 1967-68. a/ Spread over U.S. Government 2-1/2 per cent of 1963-68. e/ Government of Canada > l / U per cent of October 1979# y Spread over U.S. Government 3 - l A per cent of 1978-83. g/ Government of Canada 3 - 3 A per cent of September 1996 - March 1998. H/ Spread over U.S. Government of 199$• " l8 ~ Canada: Changes in Distribution of Holdings of Canadian Government Direct and Guaranteed Securities (millions or Canadian dollars, par value; Bank of Canada %eas. bills Bonds June 23 30 July 7 Ht Aug 21 28 k 11 18 25 + + + - k 5 18 2 15 18 3 12 3 6 + + + + + + + + Government Total 13 5 U8 12 5 13 11 5 17 l Chartered banks Treas. bills Bonds + + + + + - 17 0 + 13 - 2 + 13 + 25 + 57 + 15 + 2 + 1 + + + + + 5 U6 21 2h k u 12 8 21 2h 2 11 27 6 k 3 3k 1 10 2 General public Savings Treas. bonds billb Bonds - 7 7 5 2 6 6 5 5 5 6 + + + - 1 Uo U9 2k k 37 0 + 11 - 19 - m Source: Bank of Canada, Weekly Financial Statistics* Canada and the United S t a t e s ; Canada Treasury b i l l (3-mo.) 1967-8 1979 1996-8 United S t a t e s Treasury b i l l (3-mo.) ' U . S . 2-1/2 per cent 1963-68 U.S. 3 - l A per c e n t , 1978-83 U.S. 3 p e r cent 1995 Source: Comparative Bond Yields I960 Aug. 25 I960 July 21 2.25 U.25 U.77 U.83 3.19 U.55 4.88 lt.86 5.21 5.28 5.33 5.10 5.13 lt.90 2.1*9 3.56 3.77 3.68 2.3U 3.70 3.76 3.62 2.86 U„08 UoOl 3.67 3.60 U.60 U.12 3.86 Bank of Canada, Weekly F i n a n c i a l S t a t i s t i c s . I960 March 23 3.U1 5.19 1959 Aug. 26 + k - 17 - 25 - 15 - k - 10 - 35 - 9 -23 - k