Full text of H.16 Capital Market Developments : October 10, 1960

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Not f o r P u b l i c a t i o n

DECONTROLLED AFTER SIX MONTHS
October 10, 19& •

H.1UCAPITAL MARKET DEVELOPMENTS
IN THE UNITED STATES AND CANADA
( I n c l u d i n g Monthly Review of F i n a n c i a l
Developments i n t h e United Kingdom)
P a r t I - United S t a t e s

Four l a r g e c o r p o r a t e s e c u r i t y i s s u e s with p r o c e e d s t o t a l i n g
$170 m i l l i o n were s o ld l a s t week and a f i v e - y e a r F e d e r a l Land Bank bond
issue—$1^2 m i l l i o n of which r e p r e s e n t e d new c a p i t a l — w a s s o l d . A l l b i d s
on t h e o n l y l a r g e S t a t e and l o c a l government bond o f f e r i n g d e f i n i t e l y
scheduled f o r s a l e were r e j e c t e d . This week one S t a t e and l o c a l g o v e r n ment bond i s s u e f o r $70 m i l l i o n i s on t h e c a l e n d a r and a $20 m i l l i o n
c o r p o r a t e i s s u e i s t e n t a t i v e l y scheduled f o r p u b l i c o f f e r i n g .
Long-term bond y i e l d s - Y i e l d s on a l l major t y p e s of l o n g - t e r m
bonds i n c r e a s e d l a s t week. The i n c r e a s e was f a i r l y sharp i n y i e l d s on
l o n g - t e r m U. S. Government bonds.
S h o r t - and i n t e r m e d i a t e - t e r m i n t e r e s t r a t e s - Y i e l d s on Treasury
b i l l s and t h r e e - t o f i v e - y e a r T r e a s u r y o b l i g a t i o n s i n c r e a s e d l a s t week.
P r i v a t e s h o r t - and i n t e r m e d i a t e - t e r m i n t e r e s t r a t e s were unchanged.
Mortgage r e c o r d i n g s - Nonfarm mortgage r e c o r d i n g s , which
d e c l i n e d c o n t r a s e a s o n a l l y i n J u l y , were 18 p e r c e n t below t h e r e c o r d
monthly l e v e l of a y e a r e a r l i e r . T h i s was t h e s h a r p e s t y e a r - o v e r - y e a r
d e c l i n e r e g i s t e r e d i n any month of i 9 6 0 .
Common s t o c k p r i c e s - Common s t o c k p r i c e s , a s measured by
Standard and P o o r ' s i n d e x of 5>00 s t o c k s , i n c r e a s e d s l i g h t l y l a s t week,
c l o s i n g on F r i d a y a t 5U.03. Trading volume was l i g h t , a v e r a g i n g Z.h
million shares a day.
More d e t a i l e d i n f o r m a t i o n concerning r e c e n t c a p i t a l market
developments i s p r e s e n t e d 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 m a r k e t s a r e p r e s e n t e d
i n P a r t I I a t t h e end of t h i s r e p o r t .

C a p i t a l Markets S e c t i o n ,
D i v i s i o n of Research and S t a t i s t i c s ,
Board of Governors of t h e F e d e r a l Reserve System.




L O N G - T E R M B O N D YIELDS

HIGH-GRADE

/
KiT

LOWER-GRADE




/Vf
U.S. 60VEBMMENT

(Per cent)
Low
High
Low
High
Low
1960 - High
Low

2.85
it.lit
3.55
it. 61
U.09
4.61
it. 23

Sept. 9
S e c t . 16
S ept . 23
Sept . 30
Oct. 7 2 /

}t. 23
4.26
it. 26
it. 27
It. 28

-

(li/23)
(9/27)
(5/2)
(12/31)
(1/9)
(1/29)
(9/9)

Spread between
U. S. Govt, and
S t a t e and
Corporate
l o c a l Aaa
Aaa

S t a t e and
l o c a l govt.
Aaa y

U. S. Govt,
long-term 2/

Corporate
Aaa 1 /

1954
1957
1958
1959

-3-

E x h i b i t B - Tables f o r E x h i b i t A
Long-term Bond Y i e l d s
Higjh-grade

II. 14

ill

2.ii5 ( 8 / 6 )

3.76 (10/18)
3.07 (14/25)
it. 37 (12/31)
3.83 ( 1 / 2 )
it.lt2 ( 1 / 8 )
3.75(8/5)

'&fwi
2.99 ( 9 / 1 )

3.84
3.84
3 . 79

3.03
3.13
3.13

3.88

3.21

3.18

3.81

.30
.60
.22
.50
.16
.59
•19

.30
.it?
.3lt
.92
.53
.92
.53

.39
.42
.47
.46
.4o-

.81
.71
.66
.63
.67

Lower-grade

Date

Corporate
Baa 1 /

S t a t e and
local govt.
Baa y

Spread between
Aaa and Baa
S t a t e and
Corporate
l o c a l govt.

(Per cent)
Low
High
Low
High
Low
1960 - High
Low

3.44
5.10
4.51
5.32
4.83
5.36
4.98

Sept. 9
S e p t . 16
S e p t . 23
S e p t . 30
Oct. 7 e /

4.98
4.99
5.02
5.05
5.09

1954
1957
1958
1959

-

"¥




(12/31)
(11/29)
(7/11)
(12/31)
(4/17)
(2/12)
(9/9)

2.93 ( 8 / 5 )
S:S
4.46
3.92
4.46
4.05
4.07
4.09
4.09
4.13
4.15

W

(7/2)
(3/26)
(1/7)
(9/1)

.52
1.27
.77
:56
.84
.71
.75
.73
.76
.78
.81

.96
1.21
.93
.98
.79
1.08
.92
1.04

1

SHORT-

AND

INTERMEDIATE-

TERM

INTEREST

RATES

GOVERNMENT

3 - 5

YEAR

ISSUES

6 - MONTH

IIU$ F

-.A I T v
F. I .

MARKET

DISCOUNT

RATE

YIELDS

PRIVATE




STOCK EXCHANGE
CAU 1 0 A N S

FINANCE COMPANY PAPER
Directly Ploced

-5Bxhibit D - Tables f o r Exhibit C
S h o r t - and I n t e r m e d i a t e - t e r m I n t e r e s t R a t e s
Government
Date

Discount
rate 1/

Yields
6-month
b i l l s 2/

3-month
b i l l s 2/

3-5 year
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)
Low
High
Low
High
Low
I 9 6 0 - High
Low

1.50
3.50
1.75
Loo
2.50
Loo
3.00

.61
3.61*
.58
It. 57
2.63
1*.59
2.13

Sept. 9
S e p t . 16
S e p t . 23
S e p t . 30
Oct. 7 2 /

3.00
3.00
3.00
3.00
3.00

2.56
2.58
2.1*3
2.35
2.1*0

1951*
1957
1958
1959

-

(6/11)
(10/18)
(5/29)
(12/2b)
(2/20)
(1/8)
(8/5)

1.66
i*.0l*
3 . 0 2 ( 1 2 / 2 6 ) 2.11*
li.91 ( 1 2 / 3 1 ) 5 . 0 0
2.92 (1/2)
3.70
5.07 ( 1 / 8 )
1*.97
3.1*7
2.39 (8/5)
—

2.83
2.87
2.80
2.82
2.88

(V30) .
ao/18)
(6/6)
(12/21*)
(1/2)
(1/8)
(9/23)

3.51
3.53
3.1*7
3.50
3.60

.26
.79
.19
.58
.16

.66
.86
.01*
1.1*2
.1*0
1.81
.38

.27
.29
.37
.1*7
.1*8

.95
.95
1.01*
1.15
1.20

we*
•**»

Private

Date

Stock Exchange
call loan 1 /

Spread between 3-month
Prime
Finance company T r e a s u r y b i l l y i e l d and
rate 1/
f i n a n c e company
paper 3/
paper r a t e s
(per cent)

Low
High
Low
High
Low
I960 - High „
Low
1951*
1957
1958
1959

-

Sept. 9
S e p t . , 16
S e p t . , 23
S e p t . 30
Oct. 7 £ /

3.00
l*.5o
3.50
5.00
1*.00
5.50
• l*.5o

3.00
l*.5o
3.50
5.oo
li.oo
5.oo
l*.5o

1.25 (12/31)
3.88 (11/15)
1.13 (8/8)
1*.88 ( 1 2 / 3 1 )
3.00-(3/6)
5.13 (1/22)
2.91* ( 8 / 2 6 )

i*.5o
l*.5d
l*.5o
l*.5o
l*.5o

l*.5o
l*.5o
l*.5ti
l*.5o
l*.5o

3.06
3.11
3.19
3.19
3.19

1/

0 (12/18)
.59(7/19)
-.35 (8/29)
.86 (10/9)
.13(12/1*)
1.02 (3/25)
.22 ( V 1 5 )
•50
.53
•76
.81*
.79

Weekly r a t e shown I s t h a t I n e f f e c t a t end of p a r t e d . Discount r a t e la. f o r Federal Reserve Bank of New York.
Stock Axohans* c a l l loan r a t e l e going r a t e on c a l l loan* secured try oustooers' stock exchange c o l l a t e r a l a t
New York City bank*. Prion r a t e i o tliat charged by large banks on s h o r t - t e n loans t o business borrowers of
t h e highest c r e d i t standing.
2 / Market y i e l d ; weekly avern*ee computed from d a i l y closing bid p r i c e s . Series of 3-5 year Issues uonoietw of
eeleoled notes and boat.li.
3 / Average of dally r a t e s puMiehed Vy fiwiaoe aompanles for d l r e o t l y placed paper f o r varying m a t u r i t i e s In the
510-179 day ruivt*.
, ,
•
Note,—
and lows are f o r Individual sarlew.und' may be on d i f f e r e n t dates f o r A f f e r e n t s e r i e s . Per spread*,
nlgti r e f e r s t o widest» and low to narrowest^




>
STOCK

MARKET

1

4:
MORTGAGE

RECORDINGS




AND

1954

LOANS

Exhibit

F .

T a b l e s f o r Exliibii,

B

-7-

Stock Market

Stock price
index 1/

1957-59 - High
Low
I 9 6 0 - High
Low

60.51
39.78
59.50
53.52

August
September
S e p t . 23
Sept. 30
Oct. 7 e /

56.51
54. 81
53.90
53.52
54.03

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

(7/31/59)
(12/27/57)
(1/8)
(9/30)

3.07

4.66
3.18

3.62

fS

tl

3.9
2.4

i s II

3.43

Stock market customer c r e d i t
Customers'
Bank
Total
debit balloans to
ances it/
"others" 5/
( M i l l i o n s of d o l l a r s )

2.8

2.9

3.62
3.58

3,401

1,373

4,365
4,132

3,198
3,004

1,167
1,111

4,21*3
n.a.
n.a.
n.a.
n.a.

3,109
n.a.
n.a.
n.a.
n.a.

1,117
1,145
n.a.

2,482

1,060

is

n.a.—Not a v a i l a b l e .
g / Preliminary.
1 / Standard and Poor's composite Index of 500. common stocks, weekly closing p r i c e s , 1941-43=10. Monthly data
are averages of dally f i g u r e s rather than of Friday a 1 only. Hlgha and lows are f o r Fridays' data only.
2/ Standard and Poor's composite stock y i e l d based on Wednesday data converted t o weekly closing p r i c e s by
Federal Reserve. Yields shown are f o r dales on which price index reached i t s high or low.
3 / Averages of dally trading vol me on the New York Stock Bcoliange.
4 / End of month f i g u r e s f o r member firms of the New York Stock Bxcharye which carry margin accountst excludes
balances secured by U. S. Government o b l i g a t i o n s .
5 / Wednesday f i g u r e s f o r weekly reporting member banks. Excludes loans for purchasing or carrying U, 5 .
Government s e c u r i t i e s • Prior t o July 1, 1959; such loans are excluded only a t banks in New York and Chicago.
Weekly reporting banks account f o r about 70 p e r cent of loans t o o t h e r s . For f u r t h e r d e t a i l
Bulletin.
N o n f a r m M o r t g a g e R e c o r d i n g s a n d L o a n s 1/

Date

1959 -

July
Aug.
Sept.
Oct.
Nov.
Deo.
i960 - Jan.
Feb.
Mar.
Apr.
May
June
July

|
Unadjusted
Total
Seasonally
Unadjusted
VA.
I
FHA
adjusted 2/
( M i l l i o n s of d o l l a r s )
2,787
2,769
2,650
2,639
2,589
2,485
2,U87
2,too
2,Mil
2.W0
2,446
2,427
n.a.

3,100
2,871
2,83k
2,799
2,442
2,487
2,079
2,149
2,406
2,366
2,500
2,690
2,528

524
564
510
523
448
451
417
368
361
336
322
365
362

227
202
221
238
220
241
195
170
173
153
155
175
160

Conv.

2,349
2,165
2,103
2,039
1,775
1,794
1,467
1,612
1,872
1,878
2,023
2,150
2,006

n.a.—Not a v a i l a b l e .
1/ Total recordings data are estimates based on r e p o r t s from about 450 areas and Include
mortgages of (20,000 or l e s s secured by nonfarm r e a l e s t a t e , primarily r e s i d e n t i a l p r o p e r t i e s .
FHA-lneured loans represent gross amount of Insurance w r i t t e n , and VA-guaranteed loans the gross amount
of loans closed,on 1-4 family houses. Conventional data are derived a s a r e s i d u a l , although t o t a l
recordings and VA and FHA loans are not s t r i c t l y comparable i n concept or timing,
2/ Three-month moving average, seasonally adjusted by Federal Reserve.
Souroei- Federal Home Loan Bank Board, Federal Housing Administration and Veterans Administration.




Exhibit G
Long-term C o r p o r a t e and 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 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
April
May
June
July
August
September

821
738
61*6

728
857,/
1,5532/

766
567
1,031*

891*
785
887

1 , 1 ho
597
887

535
7li0
703

X

'fig
e/700

-

quarter
quarter
quarter
quarter

S t a t e and l o c a l 2 /
1
1958
1
1959

738
623
575

63?
858
61*6

812
953
511

1,030

932
593
1,006

798
895
551

2/555
e/600
e/675

1
I

806
1*03
651
1*56
1*7 U
435

e/550

2,151
2,367
0/2,372

2,20l*
2,567
1,979
2,61*2

3,139
2,623
2,760
2,300

1,936
2,311
§/l,830

2,11*3
2,531
1,516
1,571

2,276
2,21,1*
1,860
1,365

h>&9
e/6,890

4,771
6,750
9,392

5,762
8,522
10,823

^21:7
S/6,077

11,674
6,222
7,793

It,520
6,380
7,71*6

Excluding f i n a n c e companies k /
1,722
2,150
2/1,922

Year
1/
2/
3/
5/

l,lllt

I960

862
518
920

1st
2nd
3rd
l*th

1st
2nd
3rd
l*th

'5°0

.

879
861*
900

e/1,000 '

1st half
Three q u a r t e r s
Year

1958

577
715
860

October
November
December
quarter
quarter
quarter
quarter

Corporate 1 /
1
1 1959

1,999
2,1*12
1,716
2,503

2,899
2,586
2,731
2,213

8,630

10,1*29

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 p r o c e e d s .
I n v e s t m e n t Bankers A s s o c i a t i o n of America e s t i m a t e s of p r i n c i p a l amounts,
I n c l u d e s $718.3 m i l l i o n AT&T c o n v e r t i b l e d e b e n t u r e i s s u e .
T o t a l new c a p i t a l i s s u e s , e x c l u d i n g 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.lii

Exllibit H
Other Security Offerings 1 /

-9-

( I n m i l l i o n s of d o l l a r s )
Long-be m
Foreign government 2/
Federal agency 3/
I960
I960
|1
1958
1959
1
1959
1
January
February
March
April
May
June

2
175
70

196
53

34
72
hO

58
50
h2

139
198
120

lii8
354

523

9
5
17

__

16U

85
1
35 .

October
November
December

33
30
70

58
123
7h

547

992

Year

State and local

April
May

July
August
September

182
150
150

—

July
August
September

January
February
March

1958

81
60
2

1,163
251

199
175

—

2/200

98
150
220
86

—

707

Short-term
g o v e r n m e n t h/

Federal agency 3/

268
34^
365

190
128
295

233
460
273

479
475
511

359
500
U89

371
208
H4I4

365
: 351
# 7

563
Ml
215

357
351
26Ji

509
632
435

186
675
289

209
161
329

280

2h6
167
# 9

289
ii23
369

312
168

727

137
206
330

235
3h3
358

?31
i4l5
243

733
471
288

it,-179

3,910

6,01,7

E/370

October
November
December
Year.

.

2,321

2 #
665

!

USh
11U
137
3,096

e / Preliminary.
1/ Data presented in t h i s exhibit d i f f e r from those i n Exhibit B in t h a t refunding I s runs, an well as new .
capital iasuea, are included. Long-term s e c u r i t i e s are defined as those natuKng In m^ro than one year.
2/ Includes securities offered i n tho United States by foreign goverrmonts and t h e i r subdivisions end by
ln'.ernat'onnl organisations. Sourom Securities and Exohrvage Coinmianlort,
5/ Isoues not guareM<ed ty the U, S. Qov^rniehl. Souroei lony-tsrri, Securities and Exchange Coimlaslon)
short-term, Federal Reserve.
4 / Principally tax and bond anticipation n o t t s , warrants or c e r t i f i c a t e s and Public ftbiising Authority
not-*. In some instances t'HA rotes inoludud may have a somewhat longer term than one year. Sourcei Pond Buyer.




Exhibit I
—10—

Large Long-term P u b l i c S e c u r i t y Issues f o r New C a p i t a l
(Other t h a n U. S. T r e a s u r y ) 1 /
Proceeds of Large I s s u e s O f f e r e d
( M i l l i o n s of d o l l a r s )

Month

1959 - September
October
November
December
I960 - January
February
March
April
May
June
July
August
September

Corporate

S t a t e and
l o c a l government

199
Wo
421
230
279
262
38U
309
139
W
303
581
266

21it
29it
163
217
388
283
225
370
23k
561
191
298
367

Other 2 /

175
20
70
100
320
191
71
28
30
75
25

Large I n d i v i d u a l I s s u e s O f f e r e d October 1 through 7

Type y

Amount
Coupon
(millions Maturity rate or
Offering
of
net I n t e r - yield
dollars)
e
s
t
c
o
s
t
,

Rating

CORPORATE
San Diego Gas & E l e c . Co
Young6town Sheet & Tube
Household Finance Corp.
Columbia Gas System

1 s t mtg. b d s .
30.0
1 s t nrbg.S.F.bds.60.0
Deb.
50.0
Deb.
30.0

1990
1990
1981
1985

ii—5/8
W/2
JU—7/8
5-1/8

it. 63

U.60

it. 88
5.05

STATE AND LOCAL GOVERNMENT
None
OTHER
F e d e r a l Land Banks




Bds.

12.0

1565

lt.03

Aa
A

1-2

-11—

Footnotes
1/
2/
J/

I n c l u d e s c o r p o r a t e and o t h e r s e c u r i t y o f f e r i n g s o f -$L£> m i l l i o n a n d o v e r ; 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 a n d o v e r .
I n c l u d e s f o r e i g n government a n d I n t e r n a t i o n a l Bank f o r R e c o n s t r u c t i o n and
Development i s s u e s and n o n - g u a r a n t e e d i s s u e s by F e d e r a l a g e n c i e s .
I n t h e c a s e of S t a t e and l o c a l government s e c u r i t i e s , G. 0 . d e n o t e s g e n e r a l
o b l i g a t i o n s j R e v . - U t . , r e v e n u e o b l i g a t i o n s s e c u r e d o n l y b y income f r o m p u b l i c
u t i l i t i e s ; R e v . - Q . U t . , revenue bonds s e c u r e d o n l y by revenue f r o m qua s i - u t i l i t i e s
R e v . - S . T . , revenue bonds s e c u r e d b y revenue f r o m s p e c i f i c t a x e s o n l y ; R e v . - R e n t . ,
revenue bonds s e c u r e d s o l e l y b y l e a s e p a y m e n t s .




Exhlbit J

-12-

Forthcoming L a r g e 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
( O t h e r t h a n 0 . S. T r e a s u r y ) 1 /
E j e c t e d P r o c e e d s f r o m Forthcoming Large I s s u e s
Date of
computation

1959 - S e p t . 30
O c t . 30
Nov. 30
Dec. 31
I 9 6 0 - J a n . 29
Feb. 29
Mar. 31
Apr. 29
May 31
J u n e 30
J u l y 29
Aug. 31
S e p t . 30

During month f o l l o w i n g
d a t e shown
S t a t e and
Other 2 /
Corporate
l o c a l govt.
37k
385
226
210
207
301
299
202
483
237
596
216
576

270
115
295
1*1*5
210
255
250
21*3
277
180
27 5
283
212

70
30
1*5
35
30
30
77

Subsequent t o
d a t e shown
S t a t e and
Other 2 /
Corporate
l o c a l govt.
1*70
336
1*85
5ii5
310
385
280
258
502
380
321*
283
336

69ii
509
271
280
252
372
3a
357
553
1*55
1,006
731
836

70
30
1*5
35
60
30
127

Forthcoming L a r g e O f f e r i n g s , a s o f O c t o b e r 7
Type

Amount
Approximate d a t e
(millions
of o f f e r i n g
of d o l l a r s )

CORPORATE
A s s o c i a t e d Dry Goods Coxp.
G e n e r a l A c c e p t a n c e Corp.
L o u i s v i l l e Gas & E l e c . Co.
P a c i f i c L i g h t i n g Gas Supply Co.
F l o r i d a Power Co.
American Telephone and T e l e g r a p h Co.
John Deere C r e d i t Corp.
U n i t e d Gas Corp.
Idaho Power Co.
Wisconsin E l e c . Power Co.
T r u s t o r s ' Corp.
Commerce O i l R e f i n i n g Corp.
L i b e r i a n I r o n Ore, L t d .
N a t u r a l Gas P i p e l i n e o f America
N a t u r a l Gas P i p e l i n e of America




S.F. deb.
Sen. deb.
1 s t mtg. b d a .
S.F. d e b y
1 s t mtg. y6ds.
Debr
Deb.
Bds. & d e b .
1 s t mtg. b d a .
1 s t mtg. bds.
Partic. certif.
D e b . , b d s . & com.
Bds. & s t k .
1 s t mtg. b d s .
Pfd. stk.

20.0
20.0
16.0
25.0
25.0
250.0
50.0
60.0
15.0
30.0
1*0.0
1*5.0
30.0
25.0
15.0

O c t . 12
O c t . 17
O c t . 19
O c t . 20
O c t . 21
O c t . 25
O c t . 27
Nov. 1
Nov. 15
Nov. 16
Indefinite
Indefinite
Indefinite
Indefinite
Indefinite

J-2

-13-

Forthcoming Large O f f e r i n g s , a s of O c t o b e r 7 ( C o n t ' d )
Issuer

Type

Amount
Approximate d a t e
(millions
of o f f e r i n g
of d o l l a i s ) !

STATE AND LOCAL GOVERNMENT
S t a t e of M a s s a c h u s e t t s
Dade County, F l o r i d a
Los Angeles County Flood C o n t r o l
Dist,, California
^Chicago, I l l i n o i s , School D i s t r i c t
Pa. S t a t e P u b l i c School B l d g . Auth.
C o o k County, I l l i n o i s
Los Angeles H a r b o r D i s t . , C a l i f .
New York S t a t e Housing F i n . Agency
Los Angeles D e p t . of Wtr. and P w r . ,
California
O r l e a n s P a r i s h , L a . , School D i s t .
Kentucky T u r n p i k e A u t h .

G.O.
G.O.

69.5 •
46.0

O c t . 10
O c t . 18

G.O.
G.O.
Rev.-Rent.
G.O. '
Rev.
Rev.

10.0
15.0
21.3
25.0
12.0
100.0

Rev.-Ut.
G.O.
Rev.

12.0
10.0
55.0

Indefinite
Indefinite
Indefinite

35.0
5o.o

O c t . 17
Nov. 15

O c t . 18
O c t . 18
O c t . 19
Nov. 1
Nov. 15
November

OTHER
h i g h A u t h o r i t y of t h e European Coal
and S t e e l Community
Tennessee V a l l e y A u t h .

Bds. a n d n o t e s
Bds.

*—Included in t a b l e f o r f i r s t time.
1 / I n c l u d e s c o r p o r a t e and o t h e r i s s u e s of $15 m i l l i o n and o v e r ; 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 o v e r .
2 j I n c l u d e s 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 R e c o n s t r u c t i o n and
Development i s s u e s and n o n - g u a r a n t e e d i s s u e s by F e d e r a l a g e n c i e s .
N o t e . — D e l e t i o n s f o r r e a s o n s o t h e r t h a n s a l e of i s s u e : None.




Exhibit K
-lb-

Y i e l d s on New and O u t s t a n d i n g
E l e c t r i c Power Bonds, Rated Aa and A 1 /
Aa-rated offering yields
A-rated offering yields
Amount above
Amount above
Actual
Actual
s
e
a
s
o
n
e
d
y
i
e
l
d
s
( p e r cent)
( p e r cent) seasoned y i e l d s
(basis points)
(basis points)

1952-1959 - High
Low

5.30 (12/8/59)
2.93 ( 3 / 3 1 M )

87
-3

5.65 (9/18/59)
3.00 (3/17/5W

123
-15

1959 - J u l y
*1*.93
31
5.07
17
Aug.
It. 83
23
Sept.
60
*5.65
Oct.
5.13^
1*3
5.33
Nov.
*5.08
Dec.
*5.30
63
51
1960 - J a n . 7
28
1 : ^ /
Feb. 25
5.08
a
26
1*6
5.10
Mar. 15
32
16
17
18
11
5.00
29 ^
7
4.93
Apr. 6
L85
33
8
21
1.98
1k
k.9h
39
21
50
5.30
27
4.95
39
May 10
it. 88
32
12
26
5.10
5.20
33
25
June 17
4.95
lu82
25
28
h.Qh
27
29
"
•11
4.93
July 8
8
4.88
»
21*
4.80
S e p t . 15
c/27
L65 ,
23
28
4.55^,
4.632/
Oct. 5
* — S i n g l e o b s e r v a t i o n , n o t an a v e r a g e .
1 / Covers only 3 0 - y e a r f i r s t mortgage b o n d s , a s r e p o r t e d i n Moody's Bond
Survey. Except where i n d i c a t e d , t h e a c t u a l y i e l d f i g u r e and t h e amount above
s e a s o n e d y i e l d s a r e a v e r a g e s of o f f e r i n g s d u r i n g t h e i n d i c a t e d p e r i o d and of
t h e d i f f e r e n c e s between t h e s e new o f f e r i n g y i e l d s and y i e l d s on s e a s o n e d i s s u e s
of s i m i l a r q u a l i t y f o r t h e same day. Average m a t u r i t y f o r t h e s e a s o n e d i s s u e s
v a r i e s f r o m 26 t o 28 y e a r s .
2 / P r o v i d e s f o r a 5 - y e a r p e r i o d d u r i n g which i s s u e may n o t be c a l l e d f o r
r e f u n d i n g a t a l o w e r coupon r a t e . Monthly a v e r a g e s s o marked i n c l u d e one o r more
i s s u e s w i t h such a p r o v i s i o n . Other i s s u e s h a v e no such p r o v i s i o n .




g

-15October 1 0 , I 9 6 0
P a r t I I - Canada
Money and C a p i t a l Markets d u r i n g ' S e p t e m b e r
During September, Canadian b i l l and bond y i e l d s d e c l i n e d t o 1 9 6 0 / l o w s . I n f a c t , b i l l y i e l d s were a t t h e l o w e s t p o i n t s i n c e 1958. D u r i n g
t h i s p e r i o d , t h e Canadian b i l l s were s u b s t a n t i a l l y b e l o w y i e l d s on U n i t e d
S t a t e s b i l l s ; even w i t h t h e premium on t h e f o r w a r d Canadian d o l l a r , t h e r e
was a s l i g h t i n c e n t i v e i n f a v o r of t h e U n i t e d S t a t e s b i l l compared w i t h
t h e Canadian b i l l .
During t h e f i r s t week i n O c t o b e r , however, t h e d e c l i n e i n Canadian
b i l l y i e l d s was s h a r p l y r e v e r s e d . The y i e l d on t h e 3-month b i l l r o s e b y
60 b a s i s p o i n t s t o t h e h i g h e s t l e v e l s i n c e t h e end of A u g u s t . Bond y i e l d s
also rose f o r a l l m a t u r i t i e s .
Money m a r k e t . During September t h e 3-month T r e a s u r y b i l l r a t e
d e c l i n e d s h a r p l y t o t h e l o w e s t l e v e l s of t h e y e a r and on September 22
r e a c h e d 1 . 6 8 p e r c e n t , t h e l o w e s t s i n c e August 1958; 3^6 b a s i s p o i n t s below
t h e h i g h of J a n u a r y 7 , I 9 6 0 . The a v e r a g e y i e l d f o r September was 1 . 9 5 p e r
c e n t compared w i t h 2.1*6 p e r c e n t i n A u g u s t . (See C h a r t )
The 6-month T r e a s u r y b i l l f e l l t o new lows t h r o u g h September and
r e a c h e d 1 . 9 9 p e r c e n t on September 2 1 . During t h e l a s t week of August and
t h e f i r s t h a l f of September, when t h e b i l l r a t e was d e c l i n i n g , t h e Bank
made no changes i n i t s b i l l h o l d i n g s . I t d i d , however, s e l l $1i3 m i l l i o n
of T r e a s u r y b i l l s d u r i n g t h e l a s t two weeks of September which h e l p e d heavy
p u r c h a s e s by t h e c h a r t e r e d b a n k s . The banks p u r c h a s e d $90 m i l l i o n d u r i n g
t h e month and t h e p u b l i c s o l d $Ul m i l l i o n .
During S e p t e m b e r , t h e r e was a s u b s t a n t i a l s p r e a d f a v o r i n g t h e
U n i t e d S t a t e s b i l l over t h e Canadian b i l l , r e a c h i n g 0 . 8 p e r c e n t on
September 2 2 . A s l i g h t n e t i n c e n t i v e t o hold t h e U n i t e d S t a t e s b i l l on a
c o v e r e d b a s i s c o n t i n u e d t h r o u g h September i n s p i t e of a c l o s e t o 0 . 5 p e r
c e n t premium'on t h e 3-month frowsird Canadian d o l l a r .
A comparison of t h e y i e l d s on s h o r t - t e r m commercial p a p e r i n
some of t h e m a j o r a c c e p t a n c e h o u s e s i n Canada and t h e U n i t e d S t a t e s i n d i c a t e s t h e same t r e n d t h r o u g h September a s n o t e d i n t h e T r e a s u r y b i l l
m a r k e t . While Canadian r a t e s were g e n e r a l l y a b o v e U n i t e d S t a t e s r a t e s t h r o u g h
A u g u s t , t h e Canadian r a t e s f e l l below U . S . r a t e s i n S e p t e m b e r . S i m i l a r l y
w h i l e t h e n e t i n c e n t i v e moved a g a i n s t t h e Canadian p a p e r , t h e premium on
t h e f o r w a r d Canadian d o l l a r h e l d t h e i n c e n t i v e on a c o v e r e d b a s i s w e l l
below 0 . 5 p e r c e n t ( s e e T a b l e ) .




—]_6m

1 t o 3 month p a p e r
Canada
Aug. 25
Sept. 1
22
29

-

United S t a t e s

2.75
2.50
2.0-2.5
2.0-2.5

2.25-2.50
2.50-2.75
3.00
2.75

+0.38
- 0.25
- 0.75
- 0.50

D a y - t o - d a y l o a n s i n Canada a l s o d e c l i n e d s t e a d i l y t h r o u g h September
and t h e a v e r a g e c l o s i n g r a t e f e l l f r o m 2 . 5 8 p e r c e n t a t end of August t o
1 . 1 5 p e r c e n t a t end of September.
Bond m a r k e t . Bond y i e l d s a l s o f e l l t o new lows i n September f o r
a l l m a t u r i t i e s . While y i e l d s on s h o r t - and i n t e r m e d i a t e - t e r m m a t u r i t i e s
c o n t i n u e d t o d e c l i n e t h r o u g h September, t h e l o n g e r m a t u r i t i e s remained a t
about t h e low l e v e l s r e a c h e d e a r l y i n t h e month. The s p r e a d between
s e l e c t e d comparable Canadian and U n i t e d S t a t e s s e c u r i t i e s (Thursday y i e l d s
f o r b i l l s and Wednesday y i e l d s f o r bonds) were a s f o l l o w s :

91-day b i l l
182-day b i l l
8 - y e a r bdtnd
2 0 - y e a r bond
3 5 - y e a r btiM

S e p t . 29

Aug. 25

- 0.66
-0.78
+ 0.52
+0.91
+ 1.01

- 0.21+
- 0.35
+ 0.69
+ 1.00
+1.15

The d e c l i n e i n bond y i e l d s t h r o u g h September was g e n e r a l and
a f f e c t e d c o r p o r a t e and l o c a l Government i s s u e s a s w e l l . The Mdleod, Young,
Weir Bond Y i e l d a v e r a g e s f o r k.0 bond y i e l d s showed a 7 b a s i s p o i n t d e c l i n e
t h r o u g h September f r o m 5.U2 p e r c e n t on September 1 t o 5 . 3 5 p e r c e n t on
October 1 . The d e c l i n e s r a n g e d f r o m it b a s i s p o i n t s i n P r o v i n c i a l s t o 9
b a s i s p o i n t s i n i n d u s t r i a l s as noted i n the following t a b l e :
Sept. 1
Oct. 1
(per cent)
10
10
10
10
UO

Provincials
Municipals
Public u t i l i t i e s
Industrials
Bond y i e l d a v e r a g e

Source:

5.32
5.67
5.37
5.33
5.1*2

5.28
5.61
5.29
5.2U
5.35

Mcleod, Young, Weir Bond Y i e l d Average

While new l o n g - t e r m bond i s s u e s expanded a b o u t $33U m i l l i o n i n
September, t h e r e were no new s a l e s d u r i n g t h e month t o r e s i d e n t s of t h e
U n i t e d S t a t e s . T o t a l new i s s u e s d u r i n g t h e month amounted t o $8lU m i l l i o n ,
of which SU80 m i l l i o n were s h o r t t e r m . Some of t h e most i m p o r t a n t new
l o n g e r - t e r m i s s u e s of t h e month w e r e :




-17Manitoba % d r o
Nova S c o t i *
CNR
Newfoundland

$25 m i l l i o n t o y i e l d 5.k$%
$10 m i l l i o n t o y i e l d $ . 0 k t o $»23%
$250 M i l l i o n t o y i e l d 1*.68 t o 5.17%
$5 m i l l i o n t o y i e l d $»11%

(For d e t a i l s s e e C a p i t a l Market Developments d a t e d September 5 t h r o u g h
October 3*)
I n mid-September t h e Government announced t h e terms of t h e new
S e r i e s 15 Canada Savings Bonds. The bonds w i l l be d a t e d November 1 and w i l l
mature i n 10 y e a r s w i t h a g r a d u a t e d i n t e r e s t r a t e which w i l l y i e l d 1*.71 p e r
c e n t i f h e l d t o m a t u r i t y » This compares w i t h an a l l - t i m e peak of 1*«98
p e r c e n t f o r t h e 1959 i s s u e *
I n t e r e s t r a t e s . Three of t h e l a r g e r Canadian i n s u r a n c e companies
and one o t h e r l a r g e mortgage l e n d e r announced a r e d u c t i o n i n mortgage
r a t e s i n September, t o 7 p e r c e n t f r o m t h e 7 - 1 A t o 7 - 1 / 2 p e r c e n t l e v e l
of t h e l a s t two y e a r s . The I n d u s t r i a l Development Bank a l s o reduced
l e n d i n g r a t e s t o 6 - 1 / 2 p e r c e n t from 7 p e r c e n t . The prime bank l e n d i n g
r a t e and t h e prime r a t e s on c a l l l o a n s , however, c o n t i n u e a t t h e 5 - 3 A p e r
c e n t l e v e l of t h e l a s t y e a r and p r i v a t e bankers have i n d i c a t e d no i n t e n t i o n
of lowering r a t e s a t t h i s time s i n c e t h e y a r e a b l e t o l e n d a l l a v a i l a b l e
f u n d s a t t h e c u r r e n t r a t e ( s e e g e n e r a l bank l o a n s ) .
General bank l o a n s and money s u p p l y . Bank l o a n s s e a s o n a l l y
a d j u s t e d expanded 525 m i l l i o n i n September, f o r t h e seventh s t r a i g h t month
of e x p a n s i o n . While a d j u s t e d bank l o a n s reached a peak of $5,006 m i l l i o n
i n August 1959, t h e y S e l l a t o t a l of $235 m i l l i o n i n t h e n e x t six-month
p e r i o d . The i n c r e a s e t o d a t e b e g i n n i n g March of t h i s y e a r , was $200 m i l l i o n ,
b r i n g i n g t h e t o t a l o u t s t a n d i n g to•$1*,971 m i l l i o n , $39 m i l l i o n below l a s t
y e a r ' s peak.
The money supply expanded b y $81 m i l l i o n d u r i n g t h e July-September
q u a r t e r i n s p i t e of a $31*9 m i l l i o n d e c l i n e i n Government of Canada d e p o s i t s
a t t h e c h a r t e r e d b a n k s . The r i s e i n t h e March-September p e r i o d r e f l e c t s
i n p a r t t h e heavy s e a s o n a l needs of t h e summer months.
T o t a l Currency Outside Banks and Bank D e p o s i t s
( m i l l i o n s of Canadian d o l l a r s )
Currency
Dec. 31, 1959
March 31, I960
June 30, I960
S e p t . 30, I960

1,789
1,715
1,767
1,767

Deposits

Total

Change

11,360
11,297
11,1*81
11,561

13,11*8
13,012
13,21*8
13,329

—
- 136
+236
+ 8 1

F o r e i g n exchange. The Canadian d o l l a r r o s e s l i g h t l y above 103
(U.S. c e n t s ) on September 1 and remained so u n t i l t h e middle of t h e month.
P a r t l y i n r e s p o n s e t o t h e low l e v e l of Canadian b i l l y i e l d s , t h e Canadian
d o l l a r d e c l i n e d g r a d u a l l y a f t e r September 2 0 , and c l o s e d a t 102.20 on
October 6 ( s e e T a b l e ) . The premium on t h e forward Canadian d o l l a r a l s o r o s e
t h r o u g h t h e month from 019 p e r c e n t p e r annum on September 1 t o 0.1*3 p e r c e n t
on September 29 and 0.1*9 p e r c e n t on October 6 ( s e e T a b l e ) *




—18"
O f f i c i a l h o l d i n g s of f o r e i g n exchange^ r e f l e c t i n g i n c r e a s e d
d o l l a r h o l d i n g s , r o s e f o r t h e t h i r d c o n s e c u t i v e month i n A u g u s t , a f t e r d e c l i n i n g s h a r p l y i n May when t h e Canadian d o l l a r d e c l i n e d . P r i v a t e s h o r t - t e r m
h o l d i n g s r o s e i n May, J u n e , and J u l y , r e f l e c t i n g h i g h e r i n t e r e s t r a t e s i n
Canada d u r i n g t h a t p e r i o d .
Change i n O f f i c i a l H o l d i n g s ^ /

May
June
July
Aug.

Total

Of which
U.S.
Gold
dollars

-101.5
+. 3 3 . 6
+ 56.7
+ 16.0

-23.3
-12.2
- 3.3
- 2.1

-78.2
+U5.8
+50.0
+18.1

Change i n s h o r t term U.S. d o l l a r
holdings—private
and o f f i c i a l ! /
+ 37
+108
+15U

change i n
private
short-term
holdings^/
•115.2

• 62.2
+10U.0

1 / Souuce: Bank of Canada, S t a t i s t i c a l Nummary.
2 / Source: Federal Reserve B u l l e t i n .
3 / D i f f e r e n c e between t o t a l p r i v a t e and o f f i c i a l s h o r t - t e r m h o l d i n g s
and t o t a l o f f i c i a l h o l d i n g s .
S t o c k exchange. Through September i n d u s t r i a l s t o c k p r i c e s
d e c l i n e d s h a r p l y , and on October U were a b o u t 1 . 6 p e r c e n t o v e r t h e low
of t h i s y e a r on t h e Toronto exchange and a b o u t 3*3 p e r c e n t over t h e low
of t h e y e a r on t h e M o n t r e a l e x c h a n g e . D u r i n g September t h e d e c l i n e i n
i n d u s t r i a l s on t h e Canadian market was between U.3 p e r c e n t and 5 . 3 p e r
c e n t compared w i t h a f a l l of 8 . 7 p e r c e n t i n t h e S t a n d a r d & Poor i n d u s t r i a l
average.
Toronto
I960 - High
Low
Sept. 1
9
15
23
29
October U

Montreal

New York
S t a n d a r d & Poor

532.56
1*72.38

271.1
250.3

60.51
55.98

"505.56
503.38
U98.06
U8U.07
U80.13
179.75

271.1
272.0
269.6
26U.2
259.9
258.5

60.51
59.37
58.37
56.93
55.69
56.07

Consumer c r e d i t . Consumer c r e d i t r e a c h e d a p e a k of $ 3 . 5 b i l l i o n
i n t h e second q u a r t e r of I960 a f t e r d e c l i n i n g s l i g h t l y i n t h e f i r s t q u a r t e r
of t h e y e a r . T o t a l consqijer c r e d i t h a s grown over 3 t i m e s t h e immediate
p o s t w a r l e v e l of $1,0U9 m i l l i o n a s n o t e d i n t h e t a b l e b e l o w . During t h i s
p e r i o d p e r s o n a l c a s h l o a n s have grown t o m a j o r i m p o r t a n c e , e q u a l t o a l m o s t
50 p e r c e n t of t o t a l consumer c r e d i t a s compared w i t h a b o u t 37 p e r c e n t i n
1950 ( s e e T a b l e ) .




—19"*

Selected Canadian Money Market and Related Data
3-mo. Treas. bills
Spread
Canada
U.S^/
over U.S.

1959 - High

Low
1960 - High
Low

6.16

U.U9

1.68

U.63
2.15

3.25
5.1U

2.80

2.96
0.30
0.90
-0.82

Canadian dpna - **
Spot
3-mo. discount
j*/
forward premium(+)^
1
105.51
102.58
105.27
101.31

——
—

,

Net incentive to
hold I

0.99
-0.72

0.91
-0.57

Sept. 1
2.01
2.58
-0.57
103.03
103.08
0.19
-O.38
8
2.09
-0.U6
103.06 103.13
2.55
0.2U
-0.22
15
2.07
-0.U6
103.08 103.19
2.53
0.U2
-o.ok
22
-0.82
. 1.68
2.50
102.63
102.75
0.U9
-0.33
29
1.70
-0.66
102.28
2.33
102.39
0.U3
-0.23
Oct. 6
2.20
102.20
-0.27
2.hi
102.33
.0,1*9 •
0.22
•
a/ Average yield at weekly tender on Thursday.
5/ Composite market yield for the U.S. Treasury bill on Thursday close of business.
y In U.S. cents.
d/ 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
y
1959 - High
Low
I960 - High
Low

6.2U
5.11
5.33
1.99

S e p t .. 1
7
1U
21
28
Oct. 6

2.21
2.32
2.36
1.99
2.05
2.52

I

Intermediate
bonds (8 yr.)
Spread
Canada
uT$/

0.85
—0.86

5.37
U.50
5.55
U.09

1.11
0.21

-0.63
-0.50
-0.U8
-0.86
-0.78
-0.35

U.15
U.09
U.17
U.1U
u.09
U.23

o.5U
o.UU
0.60
0.67
0.52
0.57

—

Long-term bonds
year)
(35 year)
Spread
Spread
Canada
over
Canada
e/

" W

—*
—

.

5.30
U.UU
5.U2
U.63

1.22
0.85

5.05
U.73
5.28
U.68

1.61
0.95

U.65
U.63
U.68
U.66
U.66
U.72

0.88
0.85
0.88
0.92
0.91
0.87

U.75
U.68
U.69
U.70
" U.70
U.7U

1.03
0.95
0.97
1.03
1.01
1.00

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 - 3 A per cent of June 1967-68.
Spread over U.S. Government 2 - 1 / 2 per cent of 1963-68.
Government of Canada 3 - l A per cent of October 1979#
Spread over U.S. Government 3 - l A per cent of 1978-83.
Government of Canada 3 - 3 A per cent of September 1996 - March 1998.
Spread over U.S. Government of 199$.

I




Canada: Changes in Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
tmillions of Canadian dollars, par valueJ
Bank of Canada
Treas.
s a a . Bonds
Aug. U
11
18
25
31
Sept . 7
lb
21
28
Oct. 6

- 3
- 12
- 3
- 6
0
0
0
-16
- 27
- 1

+ 11
+ 5
+ 17
+ 1
0
0
0
0
- 2
+ 5

Government
Total
+
+
+
+
+
+

57
15
2
1
u
u
0
• 3
- 1
• 3

Chartered banks
Treas.
bills
Bonis
-^12
- 8
+ 21
+ 2U
+ 11
- 11
+ 8
+ 52

+ la
+

2

+
+
+
+
+
+
+
+
+

General public
savings areas.
beads
JBonds

3U
1
10
2
9
18
11
3
16
68

+
-

5
5
5
6
5
h
2
7
5
5

+
+
+

0
11
19
Hi
10
13
3
37
1U
3

-

35
9
23
U
9
19
12
0
- 5
+165

Source: Bank of Canada, Weekly financial Statistics*

Consumer C r e d i t
( m i l l i o n s of Canadian d o l l a r s )

End of
quarter
1950
1958
1959 - I
II
III
IV
i960 - I
II
Source:

Charge
accounts

Instalment
credit

255
U06
362
368
391
U31
380
#9

ttOl
1,277
1,226
1,282
1,317
1,368
1,322
k,395

Personal
cash
loans
383
1,318
1,380
1,502
1,568
1,588
1,582
1,690

Bank of Montreal Business Review.




Total
l,0k9
3,001
2,968
3,152
3,276
3,387
3",28k
3,U8U

Consumer c r e d i t
a s % of perst
d i s p o s a b l e in8.3
13.3
12.6
13.1
13.7
1U.1
13.5
1U.5

CANADA
THREE-MONTH TREASURY
Thursday figures ~~

RATE

RATE

-

UNITED

STATES

BILL R A T E S

DIFFERENTIAL

AND

FORWARD

CANADIAN

DOLLAR

DIFFERENTIAL

WITH

FORWARD

EXCHANGE

COVER




mo

-22-

U n i t e d Kingdom:

October 7 , I 9 6 0
Money and C a p i t a l Markets During September

An i n f l o w of c a p i t a l f r o m a b r o a d , l a r g e l y i n r e s p o n s e t o t h e
l e v e l of s h o r t - t e r m i n t e r e s t r a t e s i n B r i t a i n , c o n t i n u e d t o b e an i m p o r t a n t
f a c t o r i n London f i n a n c i a l m a r k e t s i n S e p t e m b e r . B r i t a i n ' s r e s e r v e s r o s e
try $37 m i l l i o n . i n September, d i s p i t e c o n t i n u i n g p o o r t r a d e f i g u r e s ; i f
a l l o w a n c e i s made f o r t h e $56 m i l l i o n repayment t o t h e I . M . F . , t h e g r o s s
i n c r e a s e i n r e s e r v e s was $93 m i l l i o n .
B r i t i s h T r e a s u r y b i l l y i e l d s d e c l i n e d s l i g h t l y i n e a r l y September
b u t p r e s s u r e b y t h e Bank of England on t h e d i s c o u n t h o u s e s h e l p e d t o check
t h e d e c l i n e . The y i e l d on London T r e a s u r y b i l l s exceeded t h e y i e l d i n
New York by o v e r 3 p e r c e n t . The i n c e n t i v e t o h o l d t h e London b i l l ( w i t h
exchange r i s k c o v e r e d ) f e l l t o a r e c e n t low of 0 . 7 0 p e r c e n t on September 16
b u t was a t 1 . 3 2 p e r c e n t on September 3 0 .
I n t h e g i l t - e d g e d m a r k e t , y i e l d s i n s h o r t - and i n t e r m e d i a t e t e r m m a t u r i t i e s r o s e f r a c t i o n a l l y b u t t h o s e on l o n g e r t e r m e a s e d s l i g h t l y .
American i n t e r e s t i n B r i t i s h g i l t - e d g e d bonds was r e p o r t e d i n t h e p r e s s .
U n e x p e c t e d l y i n l a t e September t h e Bank of England o f f e r e d a s u b s t a n t i a l
5 0 - y e a r b o n d , t h e l o n g e s t - t e r m i s s u e now on t h e market w i t h a m a t u r i t y
d a t e a t an e f f e c t i v e y i e l d of 5»80 p e r c e n t . F o r t h e f i r s t t i m e s i n c e
March 1958, t o t a l h i r e - p u r c h a s e d e b t f e l l i n A u g u s t .
S t o c k p r i c e c o n t i n u e d t o r i s e t o a p e a k i n e a r l y September b u t
had f a l l e n by 3 p e r c e n t by t h e end of t h e month.
Spot s t e r l i n g r o s e f r o m $2.8110 U . S . c e n t s on September 2 t o
$ 2 . 8 l 5 7 U.S. c e n t s on September 16 b u t had r e t u r n e d t o $2.8112 U . S . c e n t s
b y t h e end of t h e month. During S e p t e m b e r , b l o c k e d s e c u r i t i e s s t e r l i n g
was a t or f r a c t i o n a l l y above t h e s p o t r a t e . The d i s c o u n t on f o r w a r d s t e r l i n g
widened i n t h e f i r s t p a r t of September b u t t h e s p r e a d narrowed t h e r e a f t e r .
M o n e y m a r k e t c o n d i t i o n s . The y i e l d on T r e a s u r y b i l l s f e l l 8 b a s i s
p o i n t s f r o m 5 . 5 9 p e r c e n t t o 5 . 5 1 p e r c e n t i n e a r l y September and h e l d
s t e a d y a b o u t 5«50 p e r c e n t u n t i l t h e l a s t week i n t h e month when i t i n c r e a s e d t o 5 . 5 7 ( s e e T a b l e ) . The d e c l i n e i n y i e l d was h a l t e d a f t e r t h e
Bank of England f o r c e d t h e d i s c o u n t m a r k e t t o borrow a t t h e p e n a l r a t e
on September 1 0 , t h e day f o l l o w i n g t h e f a l l i n t h e T r e a s u r y b i l l y i e l d .
T h i s i n t e r v e n t i o n o c c u r r e d on S a t u r d a y , t h e f i r s t such move s i n c e 1 9 5 2 , and
s e r v e d t o d e m o n s t r a t e t o t h e f i n a n c i a l community t h e r e s i s t a n c e of t h e Bank
of England t o a f u r t h e r d e c l i n e i n b i l l r a t e s .
During t h i s p e r i o d , t h e y i e l d on London T r e a s u r y b i l l s exceeded
tihart).
Because of t h e w i d e r
t h e b i l l y i e l d i n New York by 3 p e r c e n t ( s e e
d i s c o u n t on f o r w a r d s t e r l i n g , however, t h e n e t i n c e n t i v e t o h o l d t h e
B r i t i s h b i l l d e c l i n e d f r o m 1.2U p e r c e n t on August 19 t o 0 . 7 0 p e r c e n t on
September 15 ( s e e T a b l e ) . T h e r e a f t e r , t h e n e t i n c e n t i v e r o s e s u b s t a n t i a l l y
r e a c h i n g 1 . 3 7 p e r c e n t on September 30 due t o d e c l i n e s i n t h e U n i t e d S t a t e s
b i l l y i e l d s and t o t h e r e d u c e d d i s c o u n t on 3-month f o r w a r d s t e r l i n g . T r e n d s
i n b i l l r a t e s i n London and New York f o r I 9 6 0 a r e shown i n a C h a r t a t t h e
end of t h i s r e p o r t .
FRASER

Digitized for


Gilt-edged market. Despite the continued c a p i t a l inflow, t h e
e a s i n g i n bond y i e l d s i n l a t p August d i d n o t c o n t i n u e i n t o S e p t e m b e r . On
t h e c o n t r a r y , bond y i e l d s r o s e s l i g h t l y d u r i n g t h e month; s h o r t and i n t e r m e d i a t e y i e l d s r o s e b y a b o u t 2 b a s i s p o i n t s and t h e Consol y i e l d by 1 1
b a s i s p o i n t s ( s e e T a b l e ) „ During t h e l a s t week i n S e p t e m b e r , t h e y i e l d on
3 - 1 / 2 p e r c e n t War Loan f e l l by 10 b a d i s p o i n t s and t h a t of 2 - 1 / 2 p e r c e n t
Consols by 5 b a s i s p o i n t s . P r e s s r e p o r t s s t a t e d t h a t s i z e a b l e American
.buying contributed t o the d e c l i n e s .
On September 3 0 , t h e Bank of England announced an o f f e r i n g of
£500 m i l l i o n of 5 - 1 / 2 p e r c e n t T r e a s u r y s t o c k 2008-12 a t £95 t o g i v e a g r o s s
r e d e m p t i o n y i e l d of 5 . 8 0 p e r c e n t — s l i g h t l y below t h e m a r k e t . T h i s s t o c k
r e p l a c e s t h e f o r m e r l o n g - t e r m "tap™ T r e a s u r y 5 p e r c e n t 1986-89 w i t h a
g r o s s r e d e m p t i o n y i e l d of 6 . 0 5 p e r c e n t , s u p p l i e s of which were f i n a l l y
e x h a u s t e d l a s t week. Income f r o m t h e bond i s t a x - f r e e f o r n o n r e s i d e n t s of
t h e U.K.
The new s t o c k r e p l a c e s t h e Funding 3 - 1 / 2 p e r c e n t 1999-200U
bond a s t h e l o n g e s t r e d e e m a b l e g i l t - e d g e d s e c u r i t y i n t h e m a r k e t . T h i s
5 0 - y e a r o f f e r i n g seems t o be d e s i g n e d f o r l o n g - t e r m i n s u r a n c e and p e n s i o n
f u n d i n v e s t o r s . The new bonds w i l l be h e l d b y t h e I s s u e Department of t h e
Bank of England and f e d i n t o t h e g i l t - e d g e d m a r k e t a s demand c o n d i t i o n s p e r m i t .
The A g r i c u l t u r a l Mortgage C o r p o r a t i o n made a p u b l i c o f f e r i n g on
September 16 of £6 m i l l i o n of newly c r e a t e d 6 p e r c e n t . d e b e n t u r e s t o c k ,
w i t h a l i f e of 22-27 y e a r s . I t was p r i c e d a t 99 w i t h a g r o s s r e d e m p t i o n
y i e l d of 6 . 0 8 p e r c e n t . The l a s t o f f e r i n g of t h e C o r p o r a t i o n , which makes
l o a n s on f i r s t mortgages on f a r m s , was o v e r two y e a r s ago f o r £ 5 m i l l i o n
w i t h a 5 - 1 / 2 p e r c e n t coupon p r i c e d a t 98 and a l i f e of 22-27 y e a r s . The
S u r r e y 6 p e r c e n t 1978-80 was w e l l r e c e i v e d and went i m m e d i a t e l y t o a
premium of t h r e e - f o u r t h s p e r c e n t .
I n t h e p a s t week s e v e r a l l a r g e companies have announced p l a n s
f o r new d e b e n t u r e i s s u e s , i n c l u d i n g filh.U m i l l i o n f o r Bowater Paper
C o r p o r a t i o n , £13 m i l l i o n f o r C i t y and C e n t r a l I n v e s t m e n t s , £ 1 2 . 3 m i l l i o n
f o r B r i t i s h Oxygen Company, £7 m i l l i o n f o r E n g l i s h E l e c t r i c and £5 m i l l i o n
f o r Gold F i e l d s Mining and I n d u s t r i a l C o r p o r a t i o n .
During t h e f i r s t e i g h t months of I 9 6 0 , new c a p i t a l i s s u e s on t h e
London market ( e x c l u d i n g T r e a s u r y o p e r a t i o n s ) t o t a l e d £352 m i l l i o n compared
w i t h £32U m i l l i o n i n 1959, a c c o r d i n g t o e s t i m a t e s of t h e Midland Bank.
The t o t a l new i s s u e s were b r o k e n down a s f o l l o w s ( i n m i l l i o n s of p o u n d s ) :
Borrows
U n i t e d Kingdom
Overseas
Total

1959

I960

281
33
3

320
32
S

While B r i t i s h b o r r o w e r s i n c r e a s e d t h e i r t a k i n g s i n I 9 6 0 , i s s u e s on b e h a l f
of o v e r s e a s c o u n t r i e s were s l i g h t l y below t h e 1959 l e v e l .
Bank a d v a n c e s . The B r i t i s h Bankers A s s o c i a t i o n q u a r t e r l y a n a l y s i s
of bank a d v a n c e s shows t h a t t h e r a t e of i n c r e a s e i n l o a n s i s s l o w i n g down




-2i|and t h a t t h e r e i s a s h i f t i n emphasis f r o m consumption t o i n v e s t m e n t ,
p a r t i c u l a r l y e n g i n e e r i n g . Loans r o s e i n t h e t h r e e months t o t h e end of
August b y £59 m i l l i o n t o £ 3 , 5 1 6 m i l l i o n compared w i t h a r i s e of £2lU
m i l l i o n i n t h e t h r e e months t o t h e end of May.
Advances of t h e London c l e a r i n g banks r o s e f r o m ntid-August t o
mid-September by £8 m i l l i o n . T h i s s l i g h t r i s e f o l l o w s t h e s u b s t a n t i a l
d e c l i n e of a d v a n c e s f r o m m i d - J u l y t o mid-August of £Ul m i l l i o n . The
l i q u i d i t y r a t i o i s 3 1 . 6 p e r c e n t compared w i t h 33-2 p e r c e n t a y e a r a g o .
I n s t a l l m ^ n t c r e d i t . F o r t h e f i r s t t i m e s i n c e March 1958, t o t a l
h i r e - p u r c h a s e d e b t f e l l i n August b y £ 1 m i l l i o n f r o m £971 m i l l i o n t o £970
m i l l i o n . I n March 1958, t o t a l d e b t o u t s t a n d i n g amounted t o o n l y £ii5l
m i l l i o n . The August d e c l i n e r e f l e c t s t h e i m p a c t of t h e r e i n t r o d u c t i o n of
h i r e - p u r c h a s e s c o n t r o l s i n A p r i l . D u r i n g t h e summer p e r i o d , t h e r a t e of
e x p a n s i o n i n i d i i s c r e d i t had a l r e a d y b e e n slowed b y t h e r e s t r i c t i o n s .
S i n c e May, d e b t owed t o h o u s e h o l d goods s h o p s , which r e p r e s e n t s
a b o u t o n e - t h i r d of t h e t o t a l , has b e e n f a l l i n g s t e a d i l y . U n t i l A u g u s t ,
however, t h i s d e c l i n e had been o f f s e t b y i n c r e a s e s i n t h e d e b t owed d i r e c t l y
t o f i n a n c e h o u s e s . There was a s m a l l e r i n c r e a s e i n t h e d e b t owed t o f i n a n c e
h o u s e s i n A u g u s t , due m a i n l y t o a f a l l o f f i n h i r e - p u r c h a s e s a l e s of a u t o m o b i l e s ; a s a r e s u l t , t h e t o t a l d e b t d e c l i n e d a s may be s e e n i n t h e f o l l o w i n g
f i g u r e s ( i n m i l l i o n s of p o u n d s ) :
Installment credit
owed t o :

May

Household goods shops
Finance houses

256
Ul8

26U
m

67U

708

Total

1959
June J u l y

I960
June J u l y

Aug.

May

273
1*69

279
U77

3U1
623

336
630

332
639

7U2

756

96U

966

971

328

H i r e - p u r c h a s e s a l e s of a u t o m o b i l e s i n September were down 7 p e r c e n t f r o m
August and down 1 1 p e r c e n t f r o m September 1 9 5 9 .
L i f e i n s u r a n c e . L i f e a s s u r a n c e b u s i n e s s t r a n s a c t e d by t h e i n d u s t r i a l l i f e o f f i c e i n 1959 a c c o u n t e d f o r a r e c o r d t o t a l of over £115
m i l l i o n n e t new s a v i n g , n e a r l y 20 p e r c e n t h i g h e r t h a n t h e 1958 f i g u r e .

Industrial
Ordinary
General

1959
(£m)

1958
(£m)

2,059
1,582
5U

1.952
1,1*51
50

F o r e i g n e x c h a n g e . Spot s t e r l i n g c o n t i n u e d t o r i s e and r e a c h e d
281.5U U . S . c e n t s on September 1 5 , i t s h i g h e s t p o i n t s i n c e mid-May 1959$
b u t f e l l t o 281.12 U . S . c e n t s l a t e r i n t h e month ( s e e T a b l e ) .
By mid-September s e c u r i t y s t e r l i n g r e a c h e d i t s h i g h s i n c e A p r i l
1959 of 281.62U U . S . c e n t s . The d i s c o u n t on 3-month f o r w a r d s t e r l i n g r o s e
t o 2 . 3 3 p e r c e n t i n midmonth b u t l a t e r f e l l t o 1 . 9 5 p e r c e n t ( s e e T a b l e ) .




-25The p r i c e of gold on t h e London b u l l i o n market r e a c h e d i t s a l l
time peak on September 28 of $35*255 p e r t r o y ounce. T h e r e a f t e r , t h e
p r i c e eased and was a t $35,215 on October 3 .
Stock m a r k e t . During e a r l y September, s t o c k p r i c e s c o n t i n u e d t h e i r
6-week r i s e and r e a c h e d a I960 peak of 338.6 on September 9 (see T a b l e ) .
T h e r e a f t e r , t h e i n d e x e a s e d , perhaps p a r t l y i n sympathy w i t h t h e s h a r p
drop i n p r i c e s on Wall S t r e e t , and was a t 325*6 on September 30, a d e c l i n e
of about 3 p e r c e n t .

B r i t i s h Commonwealth S e c t i o n
D i v i s i o n of I n t e r n a t i o n a l Finance
Board of Governors of t h e F e d e r a l Reserve System




-26U n i t e d Kingdom:

Date

T r e a s u r y B i l l Y i e l d s and Exchange R a t e s

3-mo. T r e a s u r y b i l l
. Difference
U . K ^ / U.S J y

Discount
on 3-mo.
sterlings/

Net
incentive
t o hold
.
U.K. b i l l * /

Exchange r a t e
Spot
Discount
sterling
on 3-mo. .
-/
sterling*/

„

__

__

1959 - High
Low
I 9 6 0 - High
Low

3.6
3.0
5.68
2.13

U.7
2.6
U.59
2.05

-1.1
o.U
3.63
-0.81+

(P).6U
2.33

1.95
- .23

281.57
279.83

1.6U
(P).l+7

A u g u s t 19
26
Sept. 2
9
16
23
30

5.59
5.59
5.59
5.51
5.51
5.U9
5.57

2.1+0
2.16
2.U9
2.59
2.U8
2.1+0
2.30

3.19
3.13
3.10
2.92
3.03
3.09
3.27

1.95
2.12
2.05
2.20
2.33
2.12
1.95

1.2k
1.01
1.05
0.72
0.70
0.97
1.32

281.13
281.10
281.12
281.36
281.57
281.30
281.12

1.37
1.U9
1.1+1+
1.55
1.61+
1.1+9
1.37

a/
]>/
c/
d/
e/
7/

Average y i e l d a t F r i d a y w e e k l y t e n d e r .
C l o s i n g m a r k e t y i e l d f o r F r i d a y i n New Y o r k .
S p r e a d b e t w e e n s p o t and f o r w a r d r a t e i n p e r c e n t p e r annum.
Net of d i f f e r e n c e i n b i l l y i e l d l e s s d i s c o u n t on 3-month s t e r l i n g .
S p o t r a t e i n New York m a r k e t i n U . S . c e n t s .
S p r e a d b e t w e e n s p o t ' and f o r w a r d r a t e s i n U . S . c e n t s .

U n i t e d Kingdom:
6-year
bondf/

t S P

I 9 6 0 - High
Low

6.0k
a.93

6.00
5.33

August 19
26
Sept. 2
9

5.96
5.97
5.99
6.00
5.99
6.02
6.00

5.97
5.91+
5.95
5.93
5.9k
5.97
5.96

16

23
30
a/
b/
"o/
d/
e/
f/
l/

S e l e c t e d C a p i t a l Market Y i e l d s
War ,
loan£/

-

Consols
5/

Share
yield®/

Yield
gap-/

Share
pricesS/

5.91
5.53

5.69
5.03

U.U9
3.7U

1.U9
0.76

338.6
297

5.90
5.89
5.90
5.91
5.88
5.91
5.81

5.63
5.5U
5.1+1+
5.1+5
5.1+7
5.55
5.50

1+.21+
L.18
1+.13
1+.12
1+.21+
1+.28
1+.31+

1.38
1.36
1.31
1.33
1.23
1.27
1,16

327.1
33U.U
335.2
338.6
330.1
328.7
325.6

5 - 1 / 2 per cent Exchequer.
3 p e r c e n t S a v i n g s Bond 1 9 6 5 - 7 $ .
3 - 1 / 2 p e r c e n t War Loan ( u n d a t e d ) .
2 - 1 / 2 p e r c e n t Consol ( u n d a t e d ) .
F i n a n c i a l Times.
D i f f e r e n c e b e t w e e n y i e l d on 2 - 1 / 2 p e r c e n t C o n s o l s a n d s h a r e y i e l d ,
F i n a n c i a l Times.




<7
INTEREST

ARBITRAGE,

NEW

YORK

/

LONDON

Friday figures
3-MONTH

RATE

TREASURY

DIFFERENTIAL

BILL

AND

RATES

3-MONTH

FORWARD

STERLING

1

,

;

SFIEAD IN FAVOI Of 10ND0N + !

/

J W
v v x ' - x / ' x ^ r x / ^

^

FOIWAtD IATI
Diicdit

1
L

.

-

RATE

DIFFERENTIAL

WITH




FORWARD

EXCHANGE

COVER

V

v

v

-