Full text of H.16 Capital Market Developments : July 11, 1960
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I
JUL 13 1960
Not for ^gublxcatibn DECONTROLLED AFTER SIX MONTHS
H.lb
July 11, I960
CAPITAL MARKET DEVELOPMENTS
IN THE UNITED STATES AND CANADA.
Part I - United States
(Including Monthly Review of Sources
and Uses of Funds of Financial Intermediaries)
During the week ending July 8, capital market financing
included one large corporate issue for new capital amounting to $50
million and large State and local government issues with aggregate
proceeds of $87 million. The calendar for this week includes la rge
corporate issues totaling $120 million and State and local government
issues amounting to $37 million. A foreign corporation offering for
$30 million is also scheduled for sale.
Long-term bond yields - Yields on seasoned bonds showed little
change last week, except those on U. S. Government obligations which
declined 5 basis points.
A new A-rated, first mortgage electric utility bond issue
was offered to investors last week to yield
per cent, about the
same as the last comparable offerings made in mid-June.
Short- and intermediate-term interest rates - Yields on
Treasury bills increased last week, while those on intermediate-term
issues declined moderately. Other principal money market rates
remained stable.
Stock prices - Stock prices, as measured by Standard and
Poor's index of 500 common stocks, closed at 57.38 Friday, slightly
higher than a week earlier. Trading activity, averaging 3.0 million
shares a day, was the same as a week earlier.
Institutional investors - Combined growth at three major
^
types of savings institutions—life insurance companies, savings and
loan associations and mutual savings banks—totaled $1.2 billion in
__
May, slightly more than a year earlier. The net inflow of funds to
life insurance companies and savings and loan associations was larger
this year, while the net inflow to mutual savings banks was smaller.
(The increase in time and savings deposits at commercial banks was also
smaller this May.) For the first five months of the year, the total
inflow at these three institutions was 7 per cent smaller than a year
earlier with only savings and loan associations experiencing a larger
growth than in the January-May period last year.
The net increase in life insurance company assets totaled
$5llt million in May, three per cent larger than in 195>9. Liquidation
of U. S. Government securities was somewhat larger than in May last
year. For the first time this year, net acquisitions of business
securities was larger—one-fifth larger—than in the comparable month
of 19^9. Net investment in mortgages continued to exceed last year's
volume by a substantial amount. The increase in holdings of State and
local government securities was much smaller than in the corresponding
month of 1959 as it has been in each month this year. (This probably
reflects in part the smaller volume of large new revenue bond issues this
year with yields close to those available on taxable securities.) The
increase in policy loans continued to be significantly larger than a
year earlier.
The growth in share capital at savings and loan associations
was $669 million , one-tenth larger than in May 1959. (Except in April,
inflow to these associations has been larger each month this year than
in the comparable month of 1959.) Net acquisition of mortgages was
one-eighth smaller in May than last yeair, as these associations used
their increased funds to increase their cash balances and holdings of
other assets. The increase in other assets was unusually large and
reflected in part acquisitions of Federal agency securities.
Deposits at mutual savings banks increased $58 million in May
as compared with #120 million a year earlier. Net inflow of. funds to
savings banks has been very small this year with declines in deposits
occurring in January and April. The increase in mortgage holdings was
about the same as in May 1959. There w&s a substantial liquidation of
U. S„ Government securities in contrast with a slight net acquisition
a year earligr. This May, there was a slight net acquisition of business
securitiesj in May 1959 there had been a slight liquidation of these
holdings.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Developments in the Canadian capital markets are presented
in Part II at the end of this report.
Capital Marie ets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.
LONG-TERM
BOND
YIELDS
/vf
f ' U.S. GOVEMMINT
f
STATf
AND
10CAI
GOVT.
Ie._
11. ll
-5-
Exhibit B - Tables for Exhibit A
Long-term Bond Yields
High-grade
Date
Corporate
Aaa 1/
U. S. Govt,
long-term 2/
Spread between
U. S. Govt, and
Corporate State and
local Aaa
Aaa
State and
local govt.
Aaa y
(Per cent)
19514 1957 1958 1959 -
Low
High
Low
High
Low
I960 - High
Low
2.1*5 (8/6)
2.85 (V23)
U.lit (9/27) - 3.76 (10/18)
3.55 (5/2)
3.07 (14/25)
14.61 (12/31) li.37 (12/31)
3.83 (1/2)
U.09 (1/9)
U.61 (1/29)
LL2 (1/8)
3.91 (7/8)
k.kk (7/8)
June 10
17
214
July 1
July 8 2/
14.145
li.li5
l4.a
I4.I4I4
I4.00
3.96
3.97
3.96
3.91
1.90 (9/2)
3.L5 (8/29)
2.6k (5/1)
3.65 (9/214)
3.06 (3/26)
3.53 (1/7)
3.28 (V7)
.30
.60
.22
.50
.16
.53
.19
•30
•hr
.314
.92
.53
.92
.61
3.38
3.38
3.30
3.30
3.30
.a
-i*9
.1*8
M
.53
.62
.65
.67
.66
.61
Lower-grade
Date
Corporate
Baa 1/
State and
local govt.
Baa J/
Spread between
Aaa and Baa
State and
Corporate
local govt.
(Per cent)
5.3^ (2/12)
5.17 (V8)
2.93 (8/5)
L.51 (8/2?)
3.61* (5/1)
I4.I46 (7/2)
3.92 (3/26)
I4.I46 (1/7)
14.22 (k/7)
.52
1.27
.77
.77
.56
.81*
.71
.96
1.21
.93
.98
.79
.97
.92
5.214
5.26
5.27
5.28
5.27
14.30
1.25
li.2li
h.2k
k.2k
.80
.81
.82
.8I4
.83
.92
.9U
.914
.914
.914
- Low
- High
- Low
- High
Low
IS'oO - High
Low
3.a (12/31)
5.10 (11/29)
14.51 (7/11)
5.32 (12/31)
June
June
June
July
July
19514
1957
1958
1959
10
17
2l»
1
8 2/
I4.83 U / 1 7 )
p/ Preliminary.
\J Meekly average of dally figures. Average term of bonds Included la 26-26 years.
y Weekly average of dully figures, the series lnotudes bonds due or callable In 10 years or more.
3/ Thursday figures. Only general obligation bonds are Included, average term Is 20 years.
Note.—Hlghe and lows are for Individual series and may be on different dates for different series.
-
•i
AND
INTERMEDIATE-
TERM
INTEREST^ RATES
GOVERNMENT
MARKET
YIELDS//
STOCK
PRIVATE
FINANCE
COMPANY
PAPER
EXCHANGE
Exhibit D - Tables for Exhibit C
-7-
Short- and Intermediate-term Interest Kates
Government
Discount
rate 1/
3-month
bills 2/
Yields
6-month
bills 2/
3-5 year
issues 2/
Spread between yields on
3-month bills and yields on
6-mo. bills|3-5 yr« issues"
(per cent)
Low
High
Low
High
Low
1960 - High
Low
1.50
3.50
1.75
a. oo
p.50
Loo
3.50
.61 (6/11) —
1.66 (V30)
3.61* (10/18) —
It.Oh (10/18)
.58 (5/29) 3.02 (12/26) 2.lit (6/7)
It. 57 (12/26) 1.91 (12/31) 5.00 (12/21+)
2.63 (2/20) 2.92 (1/2) 3.70 (1/2)
lt.59 (1/8) 5.07 (1/8) ii.97 (l/H)
2.18 (7/11) 2.52 (6/17) 3.87 (7/8)
June
June
June
July
July
3.50
3.50
3.50
3.50
3.50
2.61
2.31
2.39
2.18
2.27
195*4 1957 1958 1959 -
10
17
2h
1
8 e/
2.80
2.52
2.76
2.6k
2.85
1.12
3.99
li.01
3.99
3.87
.66
.26
.79
.19
.58
.16
.19
.21
•37
.lt6
.58
.86
.OU
1.1*2
.40
1.81
.38
1.51
1.68
1.62
1.81
1.60
Private
Date
Stock Exchange
call loan 1/
Spread between 3-month
Prime Finance company Treasuiy bill yield and
finance company
rate 1/ paper 3/
paper rates
(per cent)
Low
High
Low
Hi{*
Low
I960 - High
Low
3.00
It. 50
3.50
lt.75
3.75
5.50
5.00
3.00
It. 50
3.50
5.00
it. 00
5.00
5.00
June 10
June 17
June 2it
July 1
Julyfi2/
5.00
5.00
5.oo
5.oo
5.oo
5.00
5.00
5.00
5.00
5.oo
1951
1957
1950
1959
-
1/
1.25 (12/31)
3.88 (11/16)
1.13 (8/8)
It. 88 (12/31)
1.00 (It/6)
. 5.13 (1/22)
3.00 (7/1)
3.53
3.05
3.00
3.00
3.00
0 (12/18)
.59(7/19)
-.35 (8/29)
.86(10/9)
.13(12/14)
1.02 (3/25)
.22 (it/15)
.92
• 7k
.61
.82
.73
Meekly rate shown Is that in effect at end of period. Discount rate Is for Federal Reserve Bunk of New York.
Stock txohanga call loan rate Is going rata on call loans secured by customers' stock exchange collateral at
New York City banka. Prime rate la that charged by large banks on short-tern loans to business borrowers of
the highest credit standing.
y
Market yield* weekly averages computed from dally clenlng bid prices. Series of 3-5 year issues none!at* of
selected notes and bondi.
3/ Average of dally rates published by finance companies for directly placed paper for varying maturities In the
90-179 day range.
Hole.—Highs and lows are for Individual series and may be on different dates for different series. Per spread?,
nigh refers to widest, and low to narrowest.
STOCK
MARKET
MORTGAGE
AND
BOND
YIELDS
New
l»«ue« /
I
Exhibit V - Tables for EahibiL E
Stock Marktt
Stock price
index 1/
Date
Common
stock
yields 2/
(per cent)
Trading
Stock maiket customer credit
volume y
Customers *I Bank
(millions Total debit bal- I loans to
of shares)
ances 4/ 1 "others"
(Millions of dollars)
1957-59 - High
Low
I960 - High
Low
60.51 (7/31/59) 3.07
39.78 (12/27/57) I4.66
59.50 (1/8)
3.18
5U.2k (3A1)
3.51
£Z
3.9
2.4
s
U.365
It, 132
• 3,401
2,482
3,198
3,021
1,373
1,060
1,167
1,111
May
June
June 24
July 1
July 8 2/
55.22
57.26
57.68
57.06
57.38
3.3
3.5
3.7
3.0
3.0
4,132
n.a.
n.a.
n.a.
n.a.
3,021
n.a.
n.a.
n.a.
n.a.
1,111
1,132
n.a-—-Not avAll^bl. A .
3.42
3.35
3.35
3.38
3.36
%
n.a.
r> /
1/ Standard and Poor's rrmposlte index of 500 ooirmon atooks, weekly closing prices, 1941-43=10. Monthly data,
are averages of dally figures rather than of Fridays' only. Highs and lows are for Fridays' data only.
Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prices by
Federal Reserve. Yields shown are for dales on which price Index reached Its high or low,
3/ Averages of dally trading volume on the New York Stock Exoliange.4/ End of month figures for member firms of the New York Stock Exchange which carry margin accounts, excludes
balances 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 hanks account for about 70 par cent of loan* to others. For further detail see Bulletin.
Mortgage and Bond Yields 1/
Date
1953-1958 - High
Low
1959 - High
Low
1960 - January
February
March
April
May
_stune_
FHA
mortgages 2/
£ i
6.23
5.57
m
6.2k
6.23
6.22
6.20
6.20
I n.a.
Aaa corporate
Spread between new
bonds 1/
corporate bonds and
New 3/ |Seasoned 4/ FHA mortgagee 1 Seasoned bonds
4.81 (6/57)
2.74 (3/54) a
i s ®
4.58
5.29
4.12
4.29
4.95
4.96
4.66
4.78
4.86
4.6?
4.61
4.56
!:B
4.45
.90
1.29
.83
1.29
1.27
1.56
1.42
1.34
n.a.
-.12
%
.17
1
1/ Neither mortgage nor bond yields take Into account servicing costs which are much higher for mortgages than
bonds. Generally, bonds pay Interest semi-annually; mortgages, monthly. Mortgage yields, If computed as equivalent
to a semiannual interest Investment, would bo slightly higher than given in the table. .
2/ Based on FHA riold-orrloe opinions about average bid prices in the private secondary market for new-home
mortgages for Immediate delivery. Since late 1955, data relate only to 25-yenr mortgages with downpnyments of 10
per cent or more, weighted by probable volume of transactions. Yields computed by FHB, assuming 25-yenr mortgages
are paid off in 12 years. Dashed linns Indicate periods of adjustment to changes in the contractual Interest rate.
3/ First National City Bank of New York. Averages of offering yields of all new issues of publicly-sold bonds
rated Ana, Aa or A. by Moody's Inventors Service (except serial and convertible Issues and offerings of natural gas
and foreign oompunleo) weighted by nlze of issue. Yields on Aa and A Issues are first adjusted to an Aaa basis
1 categories and those on i\a*-rated bonds. The series re4/ Moocty's Inventors Service.
Monthly averages of daily data.
See Exhibit B.
Exhibit G
Long-term Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)
I960
January
February
March
Corporate 1/
1
1 1959
New capital
1958
821
738
6JU6
1,55^
894
78 5
887
1,11*0
597
887
July
August
September
740
703
1,107
51*0
1,111*
October
November
December
879
861+
900
862
518
920
April
May
June
1st
2nd
.3rd
4th
quarter
quarter
quarter
quarter
1st half
Three quarters
Year
?B
860
^/l,100 .
2,151
e/2,439
2,201*
2,567
1,979
2,642
s/4,5%) '
4,771
6,750
9,392
.
I960
736
62L
578
639
858
61*6
e/1,006.
932
593
1,006
728
3,139
2,623
2,760
2,300.
i;8
10,823
State and local 2/
1 1959 r/ | 1958
M
e/550
' 1,935
e/2,262
e/*A97
812
953
511
790
1?
56 7
516
1*65
806
1*03
651
519
1*55
1*56
1*74
1*35
l,*548
1,571
2,276
2,21,1*
1,860
1,365
4,674
6,222
7,793
4,520
6,380
7,71*6
2,11*3
Excluding finance companies 4/
1st
2nd
3rd
4th
quarter
quarter
quarter
quarter
1,722
i/2,339
Year
1,999
2,412
1,716
2,503
2,899
2,586
2,731
2,213
8,630
10,1*29
e/ Estimated.
g/ Preliminary.
__
1/ Securities and Exchange Commission estimates of net proceeds.
-2/ Investment Bankers Association of America estimates of principal amounts.
3/ Includes $718.3 million AT&T convertible debenture issue.
U/ Total new capital issues excluding offerings of sales and consumer finance
companies.
-11-
Exhibit H
h.u
Other Security Offerings 1/
(In millions of dollars)
Long-term
Federal agency 3/
Foreign government 2/
I960
1 1958
I960
1 1958
1 1959
1 1959
January
Februa ry
March
April
May
175
70
33
81
60
2
196
53
58
50
k2
139
198
120
—
199
182
150
150
175
1U8 ™r
523
—
—
I6I4
85
1
35 .
October
November
December
33
30
70
58
123
7h
86
517
992
707
9 ^
5
17
98
150
—
220
Short--term
State and local government h/
January
February
March
—
-•
July
August
September
Year
1,163
251
—
2,321
Federal agency 3/
268
3#
365
190
1*26
2#
233
1*60
273
479
I163
512
359
500
189
371
208
IW4
2/267
563
till
2L5
357
35k
26J|
509
986
h86
675
289
209
161
329
July
August
September
2h6
U67
399
289
123
369
727
365
665
1437
206
330
October
November
December
235
3h3
358
? 31
U5
2h3
733
1471
. 288
1,5L
III4
137
14,179
3,910
6,0Jt7
3,098
April
May
Year
E/ PreU*iiinry.
1/ Data presented in this exhibit differ from those in Exhibit E In that refunding Issues, an well na new
cnpltnl issuofl, e.re Included. Lone-term securities are duflnad as those mativ.v.ng in more than ono year.
2/ Includes securities offered In tho United States by foreign govemnonts and their subdivisions and by
In'.errJitlonal organ! L-xtlona. "tnurcm Securlties ami Exuhr.nge Commission,
y Isiiuixj not |7U"rsnt4 ad by the U. S. Gov-imtav.:. Sourcei long-tern, Securities and EStchangi Cor-Titnslonj
short-term, fudbral Reserve.
4f Principally tix ani bond anticipation notos, warrants or certificates er.fi Public Housing Authority
r.ot»*. In 'lono instances 1'llA rotes iriolu<l4d may h&va a somewhat longer t « n than one year. Sources Pond Buyer.
Exhibit I
-12-
Large Long-term Public Security Issues for New Capital
(Other than U. S. Treasury) 1/
Proceeds of Large Issues Offered
(Millions of dollars)
Month
1959 - June
July
August
September
October
November
December
i960 - January
February
March
April
May
June
~
Corporate
State and
local government
281*
110
363
199
1*00
•1*21
230
279
262
381*
309
139
1*1*2
635
19k
263
211*
29 k
163
217
388
283
225
370
23k
561
Other 2/
60
50
98
75
20
70
100
320
191
71
28
30
Large Individual Issues Offered July 1 through 8
Issuer
Type y
Amount
Coupon
(millions Maturity rate or Offering
Rating
of
net inter- yield
est cost
dollars)
CORPORATE
Illinois Bell Telephone Ca 1st mtg. bds. 50.0
1997
U-7/8
U.75
STATE AND LOCAL GOVERNMENT
Salt River Proj. Agric.
Imp. & Pwr. Dist., Ariz. Rev.-Ut.
State of North Carolina
G.O.
Dist. of Columbia Armory
Rev.-Ut.
Board 6/
Chicago, Illinois
G.O.
OTHER
None
19.0 1963-92/69 3.92
10.7 1961-80 3.01
19.8
37.0
1979
1962-79
1*.19
3.60
2.90-U.05^ A
2.90-3.105/ Aaa
It. 15
2.1*0-3.6^
Aaa
A
1-2
-13-
Footnotes
Includes corporate and other security offerings of $15 million and over;
State and local government security offerings of $10 million and over.
Includes foreign government and International Bank for Reconstruction and
Development issues and non-guaranteed issues by Federal agencies.
In the case of State and local government securities, G.O. denotes general
obligations; Rev.-Ut., revenue obligations secured only by income from
public utilities; Rev.-Q.Ut., revenue bonds secured only by revenue from
quasi-utilities; Rev.-S.I., revenue bonds secured by revenue from specific
taxes only; Rev.-Rent., revenue bends secured solely by lease payments.
1992 maturities not reoffered.
1961-70 maturities not reoffered.
Interest on these securities are not exempt from Federal income taxation.
Exhibit J
-Ill-
-
a
s
~
"
"
"
"
Expected Proceeds from Forthcoming Large Issues
Subsequent to
date shown
During month following
date shown
Date of
computation
^vt.l°ther 2 /
Corporate
1959 - June 30
July 31
Aug. 31
Sept. 30
Oct. 30
Nov. 30
Dec. 31
1960 - Jan. 29
Feb. 29
Mar. 31
Apr. 29
May 31
June 30
50
165
238
|
226
210
207
301
^-299
202
1*83
237
T i
270
115
295
165
210
252
250
2U3
277
180
25
70
S
35
30
30
272
305
517
69U
509
271
280
252
372
3Wl
500
I4O6
I|02
1*70
336
5b
385
280
258
502
380
1
%
I
25
70
60
30
Forthcoming Large Offerings, as of July
Type-.
Issuer
Amount
Approximate date
(millions
of offering
of dollars)
CORPORATE
Senior notes
1st mtg. bds.
Deb.
S.F. deb.
1st mtg. bds.
S.F. deb.
1st mtg. bds.
Pfd. stk.
Com. stk.
Commercial Credit Co.
Northern Illinois Gas Co.
American Can Co.
State Loan & Finance Co.
Southern Counties Gas Co.
Seaboard Finance Co.
^Natural Gas Pipeline Co. of Am.
^Natural Gas Pipeline Co. of Am.
El Paso Natural Gas Co.
Conv. deb.
Consumers Power Co.
Deb.
^International Harvester Credit Corp
Deb.
Texas Eastern Transmission Corp.
Deb., bds. & com.
Commerce Oil Refining Coip.
Partic. certif.
Trustors' Corp.
50.0
30.0
1*0.0
20.0
23.0
1*0.0
25.0
15.0
30.0
38.1
50.0
25.0
1*5.0
1*0.0
July 12
~ July ll*.
July lk
July 20
July 27
Aug. 2
Aug. 8
Aug. 8
Aug. 11
(rights expire)
Aug. 12
(rights expire)
Aug.
Indefinite
Indefinite
Indefinite
STATE AND LOCAL GOVERNMENT
Santa Clara Co., California
Nassau Co., N. Y.
Carmen-Smith Hydro-Elec. Proj., Ore
http://fraser.stlouisfed.org/
Chesapeake
Bridge & Tunnel
Federal Reserve Bank of St. Louis
Comm.
G.O.
G.O.
Rev.-Ut.
Rev.—Ut.
Rev.-Ut.
11.5
27.1
25.0
30.0
200.0
July 12
July 12
July 19
July 20
Indefinite
-15-
J-2
Forthcoming Large Offerings, aar of July 8 (Cont'd)
Issuer
Type
Amount
Approximate date
(millions
of offering
of dollars)
OTHER
Liberian Iron Ore Ltd.
Bds. & stk.
30.0
July lit
*—Included in table for first time.
1/ Includes corporate and other issues of $15 million and over; State and local
government issues of $10 million and over.
2/ Includes foreign government and International Bank for Reconstruction and
Development issues and non-guaranteed issues by Federal agencies.
Note .--Deletions for reasons other than sale of issue: Mississippi River Fuel's
$21* million debenture issue—$21 million of proceeds for refunding.
.16-
Exhibit K
Yields on New and Outstanding
Electric Power Bonds, Rated Aa and A
Date
1952-1959 - High
Low
1959 - July
Aug.
Sept.
Oct.
Nov.
Dec.
I960 • Jan. 7
Feb. 25
26
Mar. 15
16
18
Apr.
f
8
14
21
27
May 10
12
5.30 (12/8/59 )
2.93 (3/31/54)
*4.93
4.83
87
-3
31
23
5.13^/
*5.08
*5.30
5.08
28
29
%
32
17
4.85
33
4.94
39
4.95
4.88
39
32
July 8
c/4.82
2§
5.07
17
*5.65
5.33
60
43
63
5.10
2/4.84
5.65 (9/18/59)
3.00 (3/17/54)
' S
25
June 17
y
Aa-rated offering yields A-rated offering yields
Amount above
Amount above
Actual
Actual
(per cent) seasoned yields (per cent) seasoned yields
(basis points)
(basis points)
25
27
51
28
5.00
4.93
11
7
4.98
21
5.30
50
5.10
5.20
26
33
11
4.95
4.93
.11
*—Single observation, not an average.
y Covers only 30-year first mortgage bonds, as reported in Moody's Bond
Survey. Except where indicated, the actual yield figure and the amount above
seasoned yields are averages of offerings during the indicated period and of
the differences between these new offering yields and yields on seasoned issues
of similar quality for the same day. Average maturity for the seasoned issues
varies from 26 to 28 years.
2/ Provides for a 5-year period during which Issue may not be called for
refunding at a lower coupon rate. Monthly averages so marked include one or more
Issues with such a provision. Other issues have no such provision.
Exhibit L
Sources and Uses of i'Xinds by
Life Insurance Companies
Cash
U. S.
Govt.
ities
Value of assets at
end of period;
1956 - Dec.
1,273
1957 - Dec.
1,29k
1958 - Dec.
1,363
1959 -Dec.
1,327
i960 - May
1,180
Changes:
1958 - Apr,
May
July
Aug.
Sept.
Oct,
Nov,
Dec,
1959 - Jan.
Feb.
Mar.
Apr.
May
July
Aug.
Sept.
Oct.
Nov,
Dec ,
i960 ~ Jan,
Feb.
Mar,
Apr,
May
June
Uses of funds 1/
Busi- State and
local govt Mortsecurgages
ities 2/ ities
Total
Other, sources
or uses
(In millions of dollars)
7,519
7,028
7,182
6,81*8
6,661
39,552
1*2,133
1*1*, 612
#,977
1*7,699
2,231*
2,377
2,691
3,177
3,301*
32,991*
35,271
37,092
39,299
1*0,1*39
12,272
13,206
ll*,6i,.o
15,996
16,625
95,81*1*
101,309
107,580
113,626
115,908
-18
81
-21*
22
-18
1
-17
55
110
11*
-71
1*5
172
1*1*
1*
11
. 19
-142
216
11*3
201
191
129
211*
309
137
308
11*
29
31*
21*
37
20
26
32
12
115
118
102
128
139
11*2
186
ll*5
291
39
161*
11*8
1*5
151*
72
72
88
331*
380
1*61*
506
582
1*85
1*53
587
1*76
913
-81
-57
-11*
-21*
10
3
-15
19
-31
22
33
99
303
-71
-185
22
-16
11
13
95
.185
-22
-131
-168
188
223
251
21*2
193
21*2
211*
75
95
208
207
227
53
30
66
1*9
79
23
91*
30
15
8
16
23
119
139
136
116
135
157
211*
171*
211
251
21*0
315
-17
171*
108
80
97
60
208
101
95
92
131*
226
565
1*38
362
1*85
1*98
1*96
728
1*9 It
200
559
1*99
722
-91
-53
-30
39
-12
163
-36
-167
-85
-62
128
125
101*
131*
231
20
25
35
21
26
271*
196
21*2
225
203
82
207
115
95
128
576
1*61*
299
1*29
511*
1/ Ustis of funds represent net changes in assets and therefore reflect net, rather
than cross, uses,
2/ Includes securities of domestic corporations only.
Source,—Institute of Lite Insurance.
Exhibit M
-18-
Sources and Uses of t\mds by
Savings and Loan Associations
Sources of funds
Uses of funds 1/
Net
Total
u. s.
Mort- Other sources change borrowGovt,
Other
gages
Cash
assets or uses savings ing ]/
2/
capital
ities
Value of assets
at end of period
19^6 - Dec.
1957 -Dec.
1958 - Bee.
-1959 - Dec.
I960 - May
Changes:
1958 - Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
1959 - Jan.
Feb.
Mar.
Apr.
May
July
Aug.
Sept.
Oct.
Nov.
Dec.
i960 - Jan.
Feb.
Mar.
Apr.
May
June
fin millions of dollars)
35,775
40,049
45,627
53,087
55,5#
2,199
2,770
3,108
3,725
4,069
42,875
46,138
55,139
63,472
66,305
37,148
41,912
47,976
54,548
57,061
1,347
1,379
1,444
2,384
1,7 21
4,380
4,847
5,719
6,540
7,523
119
42
178
-290
-70
-77
-107
42
335
403
37
12
528
81
573
42
- 554
110
564
146
578
605
104 51
470
528
37 '
102
99
-43
-90
12
137
102
-53
661
681
78y
216
616
692
739
665
847
362
511
935
73
360
447
507
480
1,072
112
-29
165
-37
51
84
58
41
212
187
199
-311
180
205
161
174
144
-437
-298
-26
-2
-182
26
21*5
-432
-43
-53
-68
65
372
297
97
76
105
23
-4
104
17
-7
7
-34
-29
402
427
593
705
754
840
783
727
670
621
459
479
t
98
151
178
10
-108
22
65
88
140
-52
346
578
765
779
981
1,091
~ 347
723
675
648
630
770
434
408
529
420
604
1,090
190
394 •
444
399
483
1,177
-181
-56
-5
97
63
313
31
118
148
136
57
219
93
226
241
262
314
-312
126
211
83
113
90
-626
-291
-34
30
-31
90
IV 6
84
-7
7
323
399
507
579
657
-116
36
113
87
224
92
485
643
642
971
437
495
539
373
669
-449
-130
-131
46
1
2,119
2,146
3,585
2,169
1,953
2,782
3,173
3,819
4,471
It,731
104
120 1
235
223
301
I-
Preliminary.
Uses of funds represent net changes in assets and therefore reflect net,
rather than gross, uses. Savings and loan associations do not hold business
securities and data on holdings of State and local government bonds, presumed
to be small, are not ava-ilable.
2/ Prior to 1957, data adjusted to include mortgage pledged shares as currently
reported.
3/ Advances from home Loan Banks and other borrowing.
DigitizedSource.—Federal
for FRASER Savings and Loan Insurance Corporation,
y
1
bxhibit N
-19-
Sources and Uses of funds by
Mutual Savings Banks
Cash
Value of assets
at end of period
1956 - Dec. 920
1957 - Dec. 890
1 9 # - Dec.
921
1959 - Dec.
829
I960 - May
732
Sources of funds
Uses of funds 1/
State &
Net
Total
Busilocal Mortsources change
ness
Other
govt. gages Other
in
deposits
ities ities1*2j ities
U.. S.
Govt.
(In millions of dollars)
7,971 3,523
7,552 it, 331
7,266 It,973
6,86k 4,849
b,bit8 4,874
Changes:
19^8 - Apr.
-47
May
-5
June
42
July -66
Aug.
-5
Sept. 18
Oct.
-8
Nov.
-38
Dec. 101
-85
-62
-36
11
19
-27
-92
-32
-2
19# - Jan.3/ -96
Feb n
18
Mar*
45
Apr, -lib
May
8
June
43
July -79
Aug.
3
Sept. -2
Oct.
-27
Nov.
20
Dec. 111
119
39
62
*44
13
-85
-13
-12
-32
-281
-85
-12
I960 - Jan.
Feb,
Mar.
Apr.
May
June
-9
-11
32
-148
-80
-131
37
a
-86
42
97
120
-24
34
8
34
-6
47
6<£
682
725
722
700
4
-19
24
8
2
2
-3
-1
-7
-16
17
6
-4
41
.-31 ^
58
*33
-20
10
19
4
-47
-1
13
8
-2
-20
-55
-8
-28
-2k
23
- -12
-9
52
-19
13
-6
-9
3
13
-23
698
33,311
19,529
35,168
20,951 761
23,039 855 ' 37,779
38,942
24,768 910
25,483 1,0214
39,461
154
195
253
193
198
161
195
15L
174
-29
40
5
-28
29
29
-U6
. 43
-3
208 -58
32
125
38
175
155 -32.
161
45
145
39
-12
179
156
33
160
31
137
-37
124
42
-12
132
159
116
150
129
161
-12
43
4L
-21
63
30,032
31,695
34,Obi
34,983
35,248
3,279
3,473
3,738
3,959
4,213
94
269
26k
152
251
237
40
123
309
93
181
300
88
143
267
95
42
418
1
68
-36
64
108
-30
-55
81
-109
175
216
330
.10
217
lbl
32
192
163
-283
65
218
122
113
313
6
120
202
-54
80
197
-187
-27
340
53
103
17
-16
97
-41
86
112
-34
-96
92
-122
-11
167
319
-132
176
-68
50
320
-95
58
57
117
-l
-37
118
1/ Uses of funds represent net changes in assets and therefore reflect, net rather
than gross, uses.
2/ Includes Canadian government and political subdivisions, International Bank for
Reconstruction and Development, nonguaranteed Federal agency and other bonds as
well as corporate bonds and stocks.
1 / Adjusted to eliminate the effect of a consolidation of a large savings bank with
a commercial bank.
Source.—National Assoc. of Mutual Savings Banks and Federal Deposit Insurance Corp.
July 11, I960
Part II - Canada
There were heavy sales of Treasury bills and marketable Government bonds by the public in Canada last week. Total holdings of the public
declined by $7U million0 On balance, the chartered banks reduced their
holdings of Government securities by $6 millionj the Bank of Canada added.
$66 million to its portfolio. The yield on the 3-month Canadian Treasury
bill remained substantially above that on the United States short bill.
With a slight premium on the forward Canadian dollar, there was a net
incentive of O089 per cent per annum to hold the Canadian bill over the
United States bill. During the week, short bonds ' had a slightly easier
tendency but yields on intermediate and long bonds were unchanged. For
the month, there was a general decline in the level of bond yields. Stock
prices showed little change last week. The Canadian dollar eased slightly
during the week but remained close to 102 (U.S. cents). Seasonally adjusted
bank loans expanded in June for the fourth consecutive month.
Money market conditions. The average yield on the 3-month
Treasury bill at last Thursday's auction rose 10 basis points to 3.17 per
cent from 3«07 per cent a week ago. The 6-month bill also rose, by 12 basis
points to 3«,35> per cent from 3„23 per cent the previous week. During the
week, the general public sold $1*9 million of bills while the Bank of Canada
bought $18 million and the chartered banks $21 million. The average closing
rate on day-to-day loans during the week was 3=13 per cent compared with
3.03 per cent a week ago.
The spread favoring the Canadian short Treasury bill over the
United States bill narrowed slightly as a result of a greater rise in the
U.S. rate. The net incentive to hold the Canadian bill also decreased
slightly from 0.9U per cent per annum to 0.89 per cent as the small premium
on the 3-month forward Canadian dollar continued.
Bond market conditions. Bond yields on shorter maturities (5 years
and under) declined slightly but there was little change in other bond yields.
The spread between selected comparable Canadian and United States securities
(Thursday yields for bills and Wednesday yields for bonds) were as follows
(figures in parentheses refer to the previous week):
O.83 per
0.U2 per
0.60 per
1<>02 per
1„27 per
cent on a 91-day bill (0.88)
cent on a 182-day bill (0.62)
cent on an 8-year bond (0.U5)
cent on a 20=year bond (0.01)
cent on a 35-year bond (1.25)
The Bank of Canada increased its holdings of bonds by $U8 million, of
which $Ul million were under 2-year maturities. The chartered banks sold
$27 million and the general public $2£ million of bonds last week.
According to the Mcleod, Young, Weir estimates, average bond yields
(of average maturity up to lU years) in Canadian markets declined between
18 and 26 basis points during June.
MeLeocU Young, Weir Bond Yield Average
(per cent)
July 2
1959
10
10
10
10
kO
Provincials,
5.52
Municipals
5.8k
Public utilities 5.U7
Industrials
5.63
Bond yield
average
5.61
Dec. 31
1959
June 1
I960
5.73
6.12
6.60
6.0U
6.1U
6.06
5.83
5.82
6.23
5.86
June 30
1960
;-
5.5U
5.88
5.58
5.56
5.6b
In accordance with the original offering in 1959 of $135 million
of Canadian Government bonds to mature October 1, I960, holders were given
the option of exchanging their bonds on or before June 30, I960, into equal
par value 5-1/2 per cent noncallable bonds due October 1, 1975« On July 6,
the Minister of Finance announced that $120,81*6,000 of the bonds have been
surrendered for the 1975 maturity. The remaining $lU,l5U,000 will be paid
off in cash on October 1, I960.
The capital market reflected the summer slow down la$t week and
no sizable offerings are expected before mid-July, the delivery date for
last month's three provincial issues: the $50 million Ontario Hydro, the
$12 million Nova Scotia, and the $7*5 million Saskatchewan. Pipe line
construction and smaller public utility investments are expected to be
stretched out or deferred until next spring. British Columbia Power
Commission will offer a $25 million 3-year, 5 per cent issue at par.
Life insurance investments. Returns on total investments of 12
Canadian life insurance companies Tor the first four months of I960 show
continued expansion in their acquisition of new mortgages and some reduction
in their Government and corporate bond purchases (see Table). Total investments increased by $229 million in this year compared with $23b million in
1959 and $191 million in 1958.
Chartered bank loans. General loans by the chartered banks showed
a seasonally adjusted increase of $19 million for June. This represents
the fourth straight month of loan expansion as may be seen in the following
seasonally adjusted figures %
January
February
March
April
May
June
$U,786 million
$U,771
"
$li,786 »
$U,802
«.
$U,8U7 M
$U,866 "
Exchange rate. The closing spot rate on the Canadian dollar
fell slightly below 102 (U.S. cents) on July 5 and closed at 101.86
Thursday July 7. A fractional premium on the 3-month forward dollar continued through the week.
Canadian Dollar Rates
(in U.S. cents)
Spot rate
3-months
forward
102.13
102.03
102.02
101.92
101.80
101.8k
102.19
102.05
102.03
101.9k
101.81
101.86
June 27
30
July 1
5
6
7
Stock market conditions. Prices of industrial stocks on the
Montreal exchange continued to decline last week while prices on the
Toronto exchange showed gains early in the week but remained below the
previous week.
New York
Standard & Poor
Toronto
Montreal
I960 - High
Low
532.9k
U8U.6O
320.0
277.9
65.02
57.00
June 13
20
30
July k
5
500.38
U90.50
U88.OO
183.26
U8U.50
285.6
279.8
275,1
272,8
272,0
61.90
60.96
60.52
British Commonwealth Section
Division of International Finance
Board of Governors of the Federal Reserve System
60,65
Selected Canadian Money Market and Related Data
Canada
Spread
over U.S.
U.S
1929 - High
Lou
I960 - Jli&h
Low
6.16
3.22
5.1)4
2.6$
a.19
2,80
ii.63
2.19
2.96
0.30
0.90
-0.69
June 16
23
30 July 7
2.71
2.98
3.07
3.17
2.32
2.39
2.19
2.3U
0.39
0.29
0.88
0.83
-
Spot
-23-
faradlfn dollar
3-mo. discount (-1
forward premium(+)2Z
102.21
102.28
102.27
101.31
101.67
101.81
102.03
101.8a
Net incentiva to
hold Can.
bi135/
—
——
-—
101.77
101.91
102.02
101.86
0.31
-0.72
0,9k
-0.27
0.37
0.2U
0.06
0.06
0.76
0.83
O.9I1
0.89
a/ Average yield at weekly tender on Thursday.
Tj/ 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 - m o . Treas . bills
Spread
Canada
uTi/
1929 - High
Low
I960 - High
Low
6.2U
2.H .
2.33
2.89
! 1
J
c/
Z/
e/
y
e/
n/
3.19
3^2
2.37
a.20
long-term bonds
(35 year J
(20 year)
Spread
Spread
Canada
over
Canada
e/
v.si/
JS£
2.30
2.22
1.11
0.21
a.aa
2.a2
a.82
1.22
0.87
0.38
a.23
0.62
0.U2
a.20
o.a9
o.a3
o.a2
a.92
a.87
a.82
0.99
0.82
-0.69
2.92
Intermediate
bonds (8 yr.)
Spread
Qaryia over
U.S.d/
O.iiO
U.U9
a.20
a.2a
0.6(5
a.82
1.02
1.01
1.02
2.02
a.73
2.28
a.9 a
2.0a
a.96
a.9a.
• a.9a
Average yield at weekly tender on Thursday.
Spread between Canadian auction rate and composite market yield of U.S.
on close of business Thursday.
Government of Canada 2-3A per cent of June 1967-68.
Spread over U.S. Government 2-1/2 per cent of 1963-68.
Government of Canada 3-lA P e r cent of October 1879*
Spread over U.S. Government 3-lA per cent of 1978-83• •
Government of Canada 3-3A per cent of September 1996 - March 1998.
Spread over U.S. Government of 199$.
1.61
0.98
.1.39
1.28
1.22
1.27
_2i,_
Canada: Changes in Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
(millions of Canadian dollars, par value;
Bank of Canada
toeas.
Bonds
bills
May U
11
18
25
June 2
9
16
23
30
July 7
+ 9
- 3
- 15
0
- 5U
- i
+ 20
- u
+ 5
+ 18
Government
Total
+ 1U
0
+ U
- u
- U8
0
+ 13
+ 13
+ 5
+ U8
+
+
-
1
2
"8
3
2
9
12
17
0
+ 13
Chartered banks
Treas.
Bonds
bills
+
-+
+
+
+
+
+
17
lU
7
Uo
32
9
hi
5
U6
21
+
+
+
+
+
+
-
General public
Savings Treas.
bonds
bills Bonds
-
7
2
17
1
8
5
5
2
11
27
7
8
7
7
7
7
3
7
7
5
+
+
-
26
26
6
39
h
9
52
1
Uo
U9
Source: Bank of Canada, Weekly Financial Statistics*
Canadian Investment Transactions of Twelve Life Insurance Companies
(millions of Canadian dollars)
1958
Govt, securities (Canadian)
Provincial bonds
Municipal bonds
Corporate and other bonds
Stocks
Mortgage loans
Real estate
Policy loans
Total
U8.9
- 1.5
7.7
39.5
1.0
8U.U
7.1
_2^
35.9
11.0
15.3
66.li
U.9
9U.9
3.3
1.9
27.2
U.6
10.2
52.5
1.5
116.3
8.3
8.1
190.7
233.5
228.7
Source: Bank of Canada Statistical Summary.
First four months
I960
1959
+
+
+
-
8
0
15
5
73
3
11
U
17
25
@FedFRASER