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l/

rHBIIB
/

Federal Reserve Bank
__ of St. Louis
-------------

/

1IrSrF inancial Data

N0V1 3 1985

November 7, 1985

The spreads between the municipal bond rate and other
long-term rates have narrowed since January 1985, as the table on
the back page indicates. Changes in interest rate spreads are the
result of changes in the demand and supply of various types of
debt instruments. These in turn depend on investors’ assessments
of tax rates and risks, both now and in the future.
The smaller spreads of today appear to be due to an
increase in the supply of municipal bonds. Why the increase? A
likely cause is the Treasury's proposed change in the tax
treatment of municipal bonds, which was released late in 1984.
Under the Treasury's tax reform proposal, as well as Reagan's
subsequent proposal, municipal bonds issued for public purpose
would retain their current tax exempt status. The interest on
municipal bonds issued after December 31, 1985, whose proceeds
are used by someone other than a state or local government,
however, would be taxable.
From January to May 1985, the average monthly issuance
of municipal bonds was $10.2 billion, up from $5.6 billion for the
same period in 1984. Since the Reagan tax reform proposal at the
end of May 1985, municipal bond issuance has increased further,
averaging $12.9 billion from June to August.
—Richard G. Sheehan
(continued on back page)

THE
FEDERAL
A RESERVE
>0 RINK of
nr

st.

ions


views expressed do not necessarily reflect official positions of the Federal Reserve System.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

2

ADJUSTED MONETARY BASE
AVERAGES OF DAILY FIGURES

SEASONALLY ADJUSTED BY THIS BANK

BILLIONS OF DOLLARS

BILLIONS OF DOLLARS
236
234

231 .3
232. I

— NOV.

232

231.5
231.4
232.6

230
228
226
224

222
220
218
216
214

212

NOV

DEC

FEB

MAR

APR

LATEST DATA PLOTTED WEEK ENDING: NOVEMBER 6,

AUG

SEP

1985

THE ADJUSTED MONETARY BASE IS THE SUM OF RESERVE ACCOUNTS OF FINANCIAL INSTITUTIONS AT FEDERAL
RESERVE BANKS, CURRENCY IN CIRCULATION (CURRENCY HELD BY THE PUBLIC AND IN THE VAULTS OF ALL
DEPOSITORY INSTITUTIONS) AND AN ADJUSTMENT FOR RESERVE REQUIREMENT RATIO CHANGES.
THE MAJOR
SOURCE OF THE ADJUSTED MONETARY BASE IS FEDERAL RESERVE CREDIT.
DATA ARE COMPUTED BY THIS
BANK.
A DETAILED DESCRIPTION OF THE ADJUSTED MONETARY BASE IS AVAILABLE FROM THIS BANK.
RECENT DATA ARE PRELIMINARY.
ADJUSTED MONETARY BASE
COMPOUNDED ANNUAL RATES OF CHANGE
11/7/84

2/6/85

4/3/85

5/8/85

7.3
9.5
10.3
9. 1
9.0
8.7
7.9

8.9
10.3
8.6
8.5
8.2
7.3

15.2
10.8
10.2
9.5
8.2

AVERAGE OF FOUR WEEKS ENDING:
6/5/85

7/3/85

8/7/85

9/4/85

8.2
8.2
7.9
6.6

6.0
6.4
5.2

7.6
5.5

4.4

TO THE AVERAGE
OF FOUR WEEKS
ENDING:
4/
5/
6/
7/
8/
9/
10/
11/

3/85
8/85
5/85
3/85
7/85
4/85
9/85
6/85

8.4
7.3
8.5
9. 1
8.5
8.5
8.3
7.7


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS

MONEY STOCK (Ml )
AVtKAGES OF DAILY FIGURES
SEASONALLY ADJUSTED

ILL IONS OF DOLLARS

ILL IONS OF DOLLARS
------------------------- iq 630

BJ LLI QMS
609.6
614.8
61 I .9
605.3
613.6
61 1 .4

I

SEP

15 29 12 26 10 24

OCT

NOV
1984

DEC

7 21

4 1«

4 IB

1

JAN

FEB

MAR

APR

LATEST DATA PLOTTED WEEK ENDING: OCTOBER 28,

15 29 13 27

MAY

10 24

JUN
1985

B 22

JUL

S

18

AUG

SEP

OCT

NOV

1985

CURRENT DATA APPEAR IN THE •SARD OF GOVERNORS* H.6 RELEASE.
“epoIitsEandmtravelerINchecksD

by the

N0NBAt*<

public,

demand deposits,

other checkable

MONEY STOCK (Ml )
COMPOUNDED ANNUAL RATES OF CHANGE ,

AVERAGE OF FOUR WEEKS ENDING:

10/29/84

1/28/8S

3/25/85

4/29/85

5/27/85

11.1
10. 1
10.6
12.2
1 1 .6
12.7
12.7
1 1 .4

9.3
10.4
13.0
12.0
13.5
13.4
11 .6

9.3
13.9
12.3
14.2
14.0
1 1 .6

18.7
14.9
16.8
16.0
12.8

15.3
17.7
16.4
12.6

7/1/85

7/29/85

8/26/85

17.6
10.8

5.7

TO THE AVERAGE
OF FOUR WEEKS
ENDING:
3/25/85
4/29/85
5/27/85
7/ 1/85
7/29/85
8/26/85
9/30/85
10/28/85


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

14.7
14.1
9.8

PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS

3

4
MONEY MULTIPLIERi/
CURRENCY COMPONENT OF MONEY STOCK v
AVERAGES OF DAILY FIGURES
SEASONALLY ADJUSTED

RATIO

RATIO

2.8
1985

RATIO

Ml MULTIPLIER

2.5

LATEST DATA PLOTTED WEEK ENDING: OCTOBER 28, 1985
BILLIONS OF DOLLARS
172

BILLIONS OF DOLLARS

COMPOUNDED ANNUAL RATES
___OF CHANGE. AVERAGE OF
THE FOUR fcEEKS ENDING
- OCTOBER 28, 1985 FROM
THE FOUR WEEKS ENDING:
-

AUG.
JUL.
JUL,
........

___OCT.

26, 1985
29, 1985
1, 1995
27, 1985
25.
1935
28, 1985
29, 1984

170

168

6.4
8.7
7.8
8.6
9.0
8.0

166

164

CURRENCY

BILLIONS
SEP.

23

168.1
168.0
168.3
168.6
169.3

.llLlu13 29

12 26 10 24

7 21

4

JAN

I

18

FEB

4 18

I

15 29 13 27

10 24

5 10

i i i

l

2 16 30 14 28

OCT

MAR

1984
LATEST DATA PLOTTED WEEK ENDING: OCTOBER 28.

8 22

i i i

11

25

NOV

1985
1985

1/ RATIO OF MONEY STOCK (Ml) TO ADJUSTED MONETARY BASE
2/ CURRENT DATA APPEAR IN THE BOARD OF GOVERNORS* H.6 RELEASE.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

PREPARED BY FEDERAL RESERVE BANK OF ST, LOUIS

TOTAL CHECKABLE DEPOSITS
AVERAGES OF DAILY FIGURES
SEASONALLY ADJUSTED

BILLIONS OF DOLLARS
450 r~------- 1------------- ,------

BILLIONS OF DOLLARS
---------------------------- =1 450

435.6
440.9

I

JAN

FEB

15 M IS 27 10 24

MAR

MAY

1984
LATEST DATA PLOTTED WEEK ENDING: OCTOBER 28,

8 22

5 10

2 16 SO 14 28 II

JUN
1985

OCT

25

NOV

1985

DEPOSITORY^?I TU?°ONSS IS THE SUM 0F “EMANO DEPOSITS AND OTVEH CHECKABLE DEPOSITS AT ALL

TOTAL CHECKABLE DEPOSITS
COMPOUNDED ANNUAL RATES OF CHANGE . AVERAGE OF FOUR WEEKS ENDING:
10/29/84
1/28/85 3/25/85 4/29/85 5/27/85
7/1/85 7/29/85 8/26/85
TO THE AVERAGE
OF FOUR WEEKS
ENDING:
3/25/85
4/29/85
5/27/85
7/ 1/85
7/29/85
8/26/85
9/30/85
10/28/85

12.8
1 1 .6
12. 1
14.1
13.3
14.6
14.8
12.9


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

10,3
11.5
14.9
13.6
15.3
15.5
13.0

10.4
16.2
14.0
16.3
16.3
13.0

21 .9
17.0
19.3
18.7
14.3

17.7
20.5
19.4
14.1

16.4
16.5
10.5

21.1
11.7

5.5

PREPAREO BY FEDERAL RESERVE BANK OF ST. LOUIS

5

6

YIELDS ON SELECTED SECURITIES
AVERAGES OF DAILY RATES

PERCENT

13.0

PERCENT
— 14.0

CORPORATE
Aaa BONDS

PRIME BANK
LOAN RATE

INI Cl PAL
BONDS

10.0

-LL1.1.1U1 30 14 28
Ini
5 19 2 10
SEP

OCT

NOV
1984

DEC

11

JAN

25

8 22

FEB

10.0

8 22

MAR

5 10

APR

3

17 31

MAY

14 28 12 28

JUN
1985

JUL

8 23

AUG

6 20

4

SEP

OCT

18

LATEST DATA PLOTTED ARE AVERAGES OF RATES AVAILABLE FOR THE WEEK ENDING: NOVEMBER 8,

1985
SEP.

OCT.

NOV.

6
13
20
27
4
1 1
18
25
1
8 *
15
22
29

90 DAY
CD’S

30-DAY
COMMERCIAL
PAPER

90-DAY
BANKERS'
ACCEPTANCES

CORPORATE

7.87
8.00
7.99
7.82
7.85
7.89
7.92
7.93
7.82
7.79

7.74
7.91
7.90
7.73
7.76
7.80
7.87
7.86
7.77
7.88

7.80
7.92
7.90
7.68
7.72
7.82
7.8!
7.80
7.71
7.69

10.94
11.13
11.11
11.05
11.07
11.12
11.03
10.94
10.87
10.71

AAA bonds

CORPORATE
Baa BONDS
12.41
12.52
12.51
12.47
12.46
12.39
12.38
12.31
12.24
12. 15

I

15 28

NOV
1985.

MUNICIPAL
BONDS MX
9.07
9.26
9.35
9.38
9.33
9.25
9. 12
8.95
8.76
N. A.

NOTE: CURRENT DATA APPEAR IN THE BOARD OF GOVERNORS* H.15 RELEASE.
* AVERAGES OF RATES AVAILABLE
** BOND BUYER’S AVERAGE INDEX OF 20 MUNICIPAL BONDS, THURSDAY DATA
N.A. - NOT AVAILABLE


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS

SELECTED

INTEREST RATES

AVERAGES OF DAILY RATES

PERCENT

PERCENT
—I 14.0

5-Y
TREASURY S

ITIES

RATE

3-MONTH
TREASURY BILL

1 I I 1 I I I
SEP

OCT

3

DEC

JAN

FEB

17 31

14 28 12 26

JUN

JUL

HIM
8 23

6 20

4

SEP

OCT

LATEST DATA PLOTTED ARE AVERAGES OF RATES AVAILABLE FOR THE WEEK ENDINGt NOVEMBER

FEDERAL
FUNDS XX
SEP.

6

13

20
OCT.

27
4
1 1
18
25

NOV.
8 X
15

7.88
7.80
7.85
7.96

8.12
7.84
8.03
8. 14
7.89
8.30

3-MONTH
TREASURY
BILL

6-MONTH
TREASURY
BILL XN6K

1-YEAR
TREASURY
BILL

5-YEAR
TREASURY
SECURITIES

7. 14
7.23
7.12
6.89
7.01
7.17
7.20
7.22
7.20
7.24

7.30
7.39
7.32
7.05
7.24
7.32
7.36
7.32
7.37
7.30

7.49
7.62
7.55
7.34
7.41
7.49
7.44
7.47
7.41
7.38

9.76
9.95
9.85
9.66
9.71
9.82
9.70
9.63
9.55
9.42

18

1

15 29

1965.

LONG-TERM
TREASURY
SECURITIES

10.68
10.87
10.80
10.73
10.73
10.81
10.67
10.57
10.48
10.33

22
29

*.narii«mrflap« wsmise
JS»S*UCTT0NY*VERAGlEfDISCOUNT^ ENDINB ™° DAYS EARLIER THAN MTE SH0WN


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

PREPARED BY FEDERAL RESERVE BAffC OF ST. LOUIS

7

8
COMMERCIAL BANK
SMALL TIME DEPOSITS^
LARGE TIME DEPOSITS v
BILLIONS OF DOLLARS
410

AVERAGES OF DAILY FIGURES
SEASONALLY ADJUSTED

13S5.

I

BILLIONS OF DOLLARS
410

billions

SEP.

1

23
30
OCT.
7

382.6
383.0
382.7

21
28

381.7
381.2

-

—

_

1

L I. J _ L

1

SMALL TIME DEPOS1 TS
-

-

370

!lll

1111

111

1111

_LLL

111

111

.1.1 1.1

LATEST DATA PLOTTED WEEK ENDING: OCTOBER 28,

-LI 1

1 1 1

H 1 1

1 1 1

1995

1 1 1

1 1 1

i

1985

BILLIONS OF DOLLARS

SEP.

1 1 1 1

BILLIONS OF DOLLARS
285

BILLION?

23

273.4
LARGE TIME DEPOSITS

275

3 IT

1

15 29 12 26 10 24
1984

7 21
JAN

4 18
FEB

4 18
MAR

I

15 20 13 27 10 24
MAY
JUN
1985

8 22

5 10

2 16 30 14 28 11 25
OCT
NOV

LATEST DATA PLOTTED WEEK ENDING: OCTOBER 28, 1985
1/ TIME DEPOSITS ISSUED IN DENOMINATIONS OF LESS THAN $100,000
2/ TIME DEPOSITS ISSUED IN DENOMINATIONS OF $100,000 OR MORE


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS

COMMERCIAL BANK
TOTAL TIME DEPOSITS
AVERAGES OF DAILY FIGURES
SEASONALLY ADJUSTED

BILLIONS OF DOLLARS

BILLIONS OF DOLLARS
790

BJLLIQN?
_

SEP.

780.8
781 .6
784.5
784.3
783.0
782.4

— OCT.

760

1

13 29 12 26 10 24

7 2)

4

JAN

FEB

18

4

18

1

IS 29

IS 27

10 24

8 22

5

19

2 16 SO 14 28 1 I

MAR

OCT

25

NOV

1964
LATEST DATA PLOTTED WEEK ENDING-. OCTOBER 28,

1985

TOTAL TIME IS THE SUM OF SAVINGS DEPOSITS, SMALL TIME DEPOSITS AND LARGE TIME DEPOSITS.

TOTAL TIME DEPOSITS
COMPOUNDED ANNUAL RATES OF CHANGE,
10/29/84

1Z28/85

3/25/85

0. 1
2.4
2.6
1.8
1 . 1
0.7
1.3
1.6

6. 1
5.6
3.6
2.3
1 .5
2.2
2.6

8.8
4.4
2.3
1.3
2.3
2.7

4/29/85

AVERAGE OF FOUR WEEKS ENDING:

5/27/85

7/1/85

7/29/85

8/26/85

2.1
3.1

6. 1

TO THE AVERAGE
OF FOUR WEEKS
ENDING:
3/25/85
4/29/85
5/27/85
7/ 1/85
7/29/85
8/26/85
9/30/85
10/28/85


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

0.0
-1.4
-1 .8
0.0
0.8

-3.7
-3.6
-0.8
0.3

-3.9
0. i
1.3

PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS

9

10

BORROWINGS FROM FEDERAL RESERVE BANKS
AVERAGES OF DAILY FIGURES

BILLIONS OF DOLLARS
10.0 ---------- ------------- r—

ILL IONS OF DOLLARS

T------------1--------1965

10.0

MILLIONS

TOTAL BORROWINGS

LATEST DATA PLOTTED WEEK ENDING: NOVEMBER 6, 1985
BILLIONS OF DOLLARS

BILLIONS OF DOLLARS

2.0
1965

MILLIONS

1.5
ADJUSTMENT ♦ SEASONAL BORROWINGS

1.0

0.5

14 28 12 26

0

6 20

3 17

MAR

APR

LATEST DATA PLOTTED WEEK ENDING: NOVEMBER 6,


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

1

15 29 12 26 10 24

7 21

4 18

AUG

6 20

FEB

3 17 31

SEP

2 16 30 IS 27

1985

PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS

0.0

J

MMDAS, MMMFS AND SUPER NOWS
(BILLIONS OF DOLLARS,

NOT SEASONALLY ADJUSTED)

MMDAs 1/
September

October

MMMFs 2/

$319.5
321.3
321.9
320.5
321.1
322.7
324.0
324.3
325.1

2
9
16
23
30
7
14
21
28

$239.8
239.1
239.0
239.0
238.4
238.5
240.8
240.5
240.0

Super NOWs 3/
$59.1
61.1
60.5
59.2
58.7
61.1
61.0
61.0
60.2

1/ Money market deposit accounts at commercial banks
2/ Total money market mutual fund balances
3/ NOW accounts at all depository institutions, requiring a $1,000 minimum balance
and eligible to earn more than 5.25 percent, effective 1/5/85

BUSINESS LOANS v

( COMMERCIAL AND INDUSTRIAL )
WEEKLY REPORTING LARGE COMMERCIAL BANKS

2/

SEASONALLY ADJUSTED BY THIS BANK

BILLIONS OF DOLLARS

BILLIONS OF DOLLARS
260

COMPOUNDED ANNUAL RATES
“ OF CHANGE. AVERAGE OF
THE FOUR WEEKS ENDING
- OCTOBER 23. 1985 FROM
THE FOUR WtEKS END I MG:
” AUG.
JUL.
- JUN.
MAY
- APR.
JAN.
_ ™
OCT.

21,
24,
26,
22,
24,
23,
24,

1985
1985
1985
1985
1985
1985
1984

-3.0

SEP. 18
253,066
OCT.

2

1 Hi 1 I I I I I I I I I
5 19

3

17 31 NOV 28 DEC
14
12

8 23

8 20
FEB

6 20
MAR

LATEST DATA PLOTTED WEEK ENDING: OCTOBER 23,

3 17
APR

1

15

12 20 10 24

7 21
AUG

4 18
SEP

2

16 30 13 27

1985

1/ BUSINESS LOANS INCLUDE BANKERS' ACCEPTANCES AND COMMERCIAL PAPER.
2/ BANKS WITH DOkCSTIC ASSETS GREATER THAN 81.4 BILLION


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS

11

Basis-Point Spread Between the Municipal Bond Rate and
Rates on Selected Securities

1985

Corporate
Aaa bonds

January
June
October

257
225
194


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Long-term
Treasury securities
196
179
158

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