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Not, for Publication

DECONTROLLED AFTER SIX MONTHS

H.lU

July 12, 1956
CAPITAL MARKET DEVELOPMENTS

The week ending July 6 was completely devoid of large
State and local issues and produced only two large corporate offerings. Utility companies accounted for both of these issues—one
of first mortgage bonds, the other of common stock—totaling $£6.6
million. AT&T's scheduled offering of $250 million in bonds on
July 11 appears to have influenced the market throughout the week
preceding its issue. Early reports indicate a favorable reception
for the Telephone issue which was priced to yield 3.73.
Despite the modest level of new State and local offerings, recent issues, including approximately $50 million of the
Public Housing Authority bonds issued the previous week, continued
to move slowly. Dealers' inventories of State and local issues
remained high—$298.3 million on Friday, July 6. This, together
with rising yields, presumably contributed to the announcement, on
July 10, of decisions to postpone indefinitely two highway bond
issues of $25 and $50 million respectively. A $38 million offering
t y the State of Massachusetts remains scheduled for July 11.
j
Bond yields - Except for corporate Aaa's, which yielded
3.26 and approximated their June level, corporate and municipal
yields continued to increase very gradually, as is shown in Exhibits A and B. This was particularly true of lower-grade yields,
with corporate Baa's registering a new high for the year at 3.78.
Dealers' price cuts to move a remaining balance of over $30 million California State bonds originally offered on June 13 increased
yields on this issue by 10 to 15 basis points, and similar price
concessions were made on a number of other municipal issues but
apparently were not of much help in reducing inventories.
Stock prices - Both stock prices and trading volume continued to climb, with prices, as measured by the SEC index of 265
common stocks, reaching 286.1 on July 6. This was 6 points higher
than the preceding Friday. Average daily trading volume climbed
200,000 shares to 2 million. . This exceeded the June average but
remained below that for May. Price rises registered throughout
June lowered the yield for that month 15 basis points from the end
of May level of 3.82 (Moody's series);
Daily indexes indicate further price rise, particularly
for industrials, through July 11. Daily volume of trading on
Wednesday passed 2.5 million shares.
More detailed information concerning the recent capital
market developments is presented in the attached exhibits.
Business Finance and' Capital Markets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.




EXHIBIT A

H I G H - G R A D E BOND YIELDS

Per cent per onnum

CORPORATE

,-V/; V
GOVERNMENT

STATE AND LOCAL
GOVERNMENT Aoo

long-term 2 /

U. S
Date.

Corporate
Aaa

Old series

New series

Spread between
State and
U. S. Govt,
local govt. (old series) and
Aaa y
Corporate]State and
Aaa
[local Aaa

(Per cent)
1953 - High
1951* - High
Low
1955 - High
Low
1956 - High
Low
June 8
June 29
July 6

3.1*2
2.99
3.09
2.85
3.17
2.91
3.30
3.07

(6/19)
(1/9)
(1/8)
(V23)
(12/23)
(1/7)
(5/1*)
(3/2)

3.27
3.26
3.26
3.27
3.26

3.15
2.78
2.71*
2.1*1*
2.91*
2.62
3.08
2.80
2.87
2.87
2.88
2.92
2.90

(6/6)
(12/26)
(1/9)
(8/7)
(8/5)
(1/7)
(l*/20)
(2/17)

n.a.

3.03
2.89
3.13
2.92
2.98
2.97
2.98
3.00
2.98

n.a.
(8/5)
(6/10)
(l*/20)
(2/3)

2.73
1.96
2.21
1.90
2.3U
2.05
2.51
2.17
2.38
2.33
2.32
2.31*
2.38

(6/25)
(1/8)
(6/10)
(9/2)
(9/8)
(5/26)
(5/3)
(2/23)

.38
.19
.1*3
.32
.31*
.13
.1*0
.13

.81*
.30
.61
.29 .
.70
.5U
.68
.1*5

.1*0
.39
.38
.35
.36

.1*9

•5k

.56
.58
.52

2/ Weekly averages of daily figures. The old series includes fully taxable,
marketable 2 1/2 per cent bonds due or first callable after 12 years through
September 1955, and those due or callable in 10-12 years thereafter; the average
term to first call of the bonds included declined from 1 * years in early 1953 to
1
11 1/2 years in early 1956. The new series is comprised cf the 3 per cent bond
of 1995 and the 3 1/1* per cent bond of 1978-83.
2/ Thursday figures. Only general obligation bonds are included; average
term is 20 years.
Note.--Highs and lows are for individual series and may be on different dates
for different aeries.




EXHIBIT

B

LOWER - GRADE BOND YIELDS

Corporate
Baa 1/

Date

State and
local govt.
Baa 2/

State and
local govt,
rev. 2/'

(Per cent)
1953 - High
Low
195U - High
Low
1955 r High
Low
1956 - High
Low

3.89
3.50
3.7U
3.hk
3.63
.3.1*5
3.78
3.58

June
June
June
June
July

3.75
3.75
3.75
3.77
3.78

8
15
22
29
6

(9/18)
(1/2)
(1/8)
(12/31)
(12/30)
(1/120
(7/6)
(3/9)

3.79
2.96
3.32
2.93
3.26
3.02
3.a
3.20
3.28
3.23
3.2U
3.2U
3.29

(6/25)
(1/8)
(1/7)
(8/5)
(12/29)
(1/6)
<5/3)
(3/8)

3.27
2.71
3.00
2.72
2.99
2.76
3.12
2.89

(6/26)
(1/2)
(1/1)
(8/13)
(12/30)
(1/7)
(U/27)
(2/210

3.02
3.00
3.01
3.03
3.0l

1/ Weekly average of daily figures. Average term of bonds
included is 25-26 years.
2/ Thursday figures. Only general obligation bonds are
included; average term is 20 years.
3/ Friday figures. Average rating of bonds included is
between Baa and A;-average term is 20 years.
Note.—Highs and lows are for individual series and may
be on different dates for different series.




STOCK MARKET

Stock price

Trading
Common
volume 2 /
(millions yields 3/
of shares) (per cent)

Stock market customer credit
Customers'
debit bal- loans.to
ances h/
"others" 2/
(Millions of dollars)

1953 - High
Low
1951; - High
1955 - High
Low
1956 - High
Low
May

Jul, 6

167.1
ia.0
221.U
156.5
270.7
217.U
290.8
257.U

(1/2)
(9/18)
(12/31)
(1/6)
(12/30)
(1/Hi)
(U/6)
(1/20)

280.1
275.5
277.7
280.1

286.1

2.5
0.9
3.7
1.U
U.6
1.5
3.1

5.75
5.15
5.33
U.20
U.22
3.78
U.08
3.68

2.U
1.8
1.6
1.8
2.0

1.6

2,hkS

1,665
1,3114

2,055
3,U36
2,1*05
1,030
3,537
Jt,0U7
3,991
U,0U7

2,810

n.a.

n.a.

n.a.

780
o6U
l,0lt8
716

1,653
2,805
2,517
2,810
2,7W

3.97
3.82

1

2,388

1,21a

1,018
1,267
1,217

'

1,237
1,223
1,222
1,223
n.a.

n.a.—Not available.
V SEC index of 265 common stocks, weekly closing prices, 1939*100; converted
to 19ti7-U9*100 by Federal Reserve. The conversion factor is 123.91.
2/ Averages of daily trading volume on the New York Stock Exchange.
3/ Moody's 200 common-stocks; end of month figures.
U/ End of month figures for member firms of the New York Stock Exchange which
carry margin accounts; excludes balances secured by D. S. Government obligations.
SJ Wednesday figures for weekly reporting member banks. Excludes loans for
purchasing or carrying U. S. Government securities at banks in New York and Chicago.
Weekly reporting banks account for about 72 -per cent of loans to others.
Note.—Highs and lows are for individual series and may be on different dates
for different series.




Exhibit D
(gt

Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)
New capital

ConDcrate
1956

January
February
March
April
May
June
July
August
September

• 1st quarter
2nd quarter
3rd quarter
4th quarter
Year

1955

1

1954

195o

St-ate and local
1

1955

1

1954

579

10k

532

4o4

1+07

517
4?6

696

535

790

1,223

635

390

538

e/890

478
886
687

497
656
842

427
350

a/730

6I|1

734
748
853

597
644

909
335
747

e/UOO

470

279
26l

e/1,100
2/760
e/1,150

670

October
November
December
9

1

1,162 ^
632
900

2,073
e/2,750

2,165
2,052
1,911

2,695
8,821

377
e/500

249

396

411
565

406

649

919

408

1,003
. 290
604
1,608
1,995
" 1,991
1,896
7,490

312

594
423
877

1,385
1,418
1,124
1,984
5,911

1,372
2,334
1,188
1,894
6,789

658
1)490

e/1,607

Excluding finance companies 2/
1st quarter
2nd quarter
3rd quarter
4th quarter
Year

1,617

e/2,550

1,727
1,870
1,434

2,551:
7,569

1,527
1,927
1,911
1,792
7,158

e/ Estimatedo
1/ Includes $637.2 million AT&T convertible debenture issue.
2/ Total new capital issues excluding offerings of sales and personal finance
companies.
Note.—Details may not add to totals due to rounding.




Exhibit E

H.lU

Large Public Security Issues for New Capital
(Other than U. S. Treasury) 1/
Proceeds of Large Issues Offered
(Millions of dollars)
Month

Corporate

195# - June
July
August
September
October
November
December
1956" » January
February
March
April
May
.
June

State and
local government

175
101
1+05
328
805
221
263
95
212
278 .
395 .
623
185

.

Other 2/

__

403
278
65
23k
716
UOI
227
192
m
163
157 •
233
I63

25
50
we

*

50
20'

Large Individual Issues Offered July 1 through 6

Issuer

Type 3/

Amount
Coupon
(millions
rate or Offering
Maturity net inter- yield Rating
of
dollars)
est cost

CORPORATE
Florida Power Corp.
Pacific Gas & Electric

1st mtg. bds. 20.0
Common stk. 36.6

1986

3 7/8

3.82

STATE & LOCAL GOVERNMENT
None
OTHER
None
1/ Includes corporate and other security offerings of S15 million and over;
State and local government security offerings of $5 million and over.
2/ Includes foreign government and International Bank for Reconstruction
"nd Development issues.
3/ In the case of State and local government securities, G.O. denotes general obligation; Rev., revenue bonds; G.R., general obligations additionally
secured by facilities revenues; L.L., limited liability obligations secured by

pledge of designated revenues.



9
Exhibit F
Forthcoming Large Public Security Offerings for New Capital
(Other than U. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
During month following
Subsequent to
date shown
date shown
Corporate State and Other 2/ Corporate State and Other 2/
local govt.
local govt.

Date of
computation
1955 - June 30
July 29
Aug. 31
Sept. 30
Oct. 31
Nov. 30
Dec. 30
1956 - Jan. 31
Feb. 29
Mar. 30
Apr. 30
May 31
June 30

67
U07
222
805
202
215
176
123
380
568
198
U37

3 UU
100
18U
8U3
330
205
121
327
220
132
173
332
81

830
1,135
920
909
50

1*12

:M
230

233
1,013
818

as
567

1,845

2,018

1,971
2,205
1,650

in

50

917
785
811
832
9kl
690

Forthcoming Large Offerings, as of July 6
Issuer

Type

Amount
Approximate date
(millions
of offering
I of dollars)

CORPORATE
American Telephone and Telegraph Co,
Deb.
Tennessee Gas Transmission Co.
Deb.
Union Electric Co.
1st mtg. bds.
Superior Oil Co. of Calif.
Deb.
*J. P. Stevens & Co.
S.F. Deb.
Inland Steel Co.
1st mtg. bds.
. Sperry Rand Corp.
Common stk.
Illinois Power Co.
Food Machinery and Chemical Corp.
Champion Paper & Fibre Co.
^Michigan Wisconsin Pipe Line Co.
Consolidated Natural Gas Co.
CIT Financial Coxp.
Pacific Finance Corp.




1st mtg. bds.
Deb.
Deb.
1st mtg. bds.
Deb.
Deb.
Deb.

250.0
30.0

1*0.0
U5.7
28.7

50.0
52.7

20.0
30.0
16.5
25.0

30.0

75.0
25.0

July 11
July 10
July 17
July 18
July 18
July 19
July 25
(rights expire)
July 25
July 26
July 26
August 1
Summer
1956
1956

H.lU

F-2
Forthcoming Large Offerings, as of July 6 (Cont'd)
Issuer

1

Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT
G.O.
State of Massachusetts
Rev.
State of Michigan
Tulsa, Oklahoma, Independent
G.O.
School District
Dearborn, Michigan, School District
G.O.
Maryland State Roads Commission
G.O.
Jacksonville, Florida
Elec. rev. bds.
Oklahoma City, Oklahoma
G.O.
New Jersey Highway Authority
Rev.
New York State Thruway Authority
G.O.
Jacksonville Expressway Authority
Rev.
Florida State Turnpike Authority
Rev.
Oklahoma Turnpike Authority
Rev.
Pennsylvania Turnpike Commission
Rev.
Washington State Toll Bridge Auth.
Rev.
Inter-American Center Auth., Fla.
• Rev.

38.5
16.0
5.5'.
•lU.o
15.0
lU.o
8.1
25.0
5o.o
142.0
185.0
65.0
62.0
227.0
70.0

July 11
July 17
July 17
July 18
July 2h
July 2k
July 25
Sunimer
Summer
September
Fall
1956
1956
1956
1956

None
^—Included in table for first
n.a.~Not available.
,1/ Includes corporate and other issues of |15 million and overj State
and local government issues of $5 million and over.
2/ Includes foreign government and International Bank for
Reconstruction and Development issues.




Exhibit G
Yields on New and Outstanding
Electric Power Bonds, Rated Aa and A 1/

Date

1952
1953
195k
1955

average
average
average
average

1956 - January
February
March 8

16 .
23
30

Aa-rated offering yields
A-rated offering yields
Amount above
Amount above
Actual
Actual
seasoned yields
seasoned yields
(per cent)
(per cent)
(basis points)
(basis points)

'3.16
3.1*6
3.03
3-23

13
16
3
9

None
*3.15
3.19

3
5

3-35
3.78
3.12
3.33
None

.

3.37

19
18

3-35

June 8

20 •
July 3

7
25
23
26
29

3.80
3.73

lO
i

3.53
3.52

-5

3.55
3.57
3.60
3-67

18

3-77

3.23

April U

h
11
25
May 9
lo
2h

12
. 26
-3
12

32
2h

3.75
3.82

27
28

.

*—Single observation, not an average.
1/ 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. The number of new issues included in the
monthly averages varies from 2 to U except for October 19 5U when 6 A-rated .
issues were included. Average maturity for the seasoned issues varies from 26
to 28 years.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102