Bluebook

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The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act.

1

In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing).

2

A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff.

Content last modified 6/05/2009.

(CONFIDENTIAL

FR)

November 17, 1972

MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee

By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

November 17,

CONFIDENTIAL (FR)

1972

MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1)

During recent weeks the monetary aggregates have continued to

show quite moderate growth.

In October, expansion of the narrowly defined

money supply slowed to a 4 per cent annual rate, somewhat below growth rates for August and September, little

but M2 grew at close to an 8 per cent annual rate,

changed from August and September.

More detail on the recent performance

of the aggregates is contained in Table 2 attached and Appendix Table 1. (2) growth in

M1 is

For October and November combined, in

data now available suggest that

the lower half of the 3-1/2 to 6-1/2 per cent range accept-

able to the Committee--as shown in

the table below.

M2,

however,

be running slightly above the mid-point of its acceptable range. RPD's,

appears to In the case of

the October-November growth rate appears to be falling substantially below

the Committee's 9-14 per cent range of tolerance, although during most of the inter-meeting period the estimates available remained within but near the low end of the range.

The drop in RPD below the range of tolerance for the most

part reflects misspecification of the multiplier relationship between reserves and deposits that has apparently evolved after the new Regulation D went into effect. Growth in Monetary Aggregates and RPD During October-November Period (SAAR in percentage points)

RPD

Ranges of Tolerance 9-141/

M1

3-1/2--6-1/2

M2

5--8

Current Estimates 5-1/2 4-1/2 7

MEMO: Federal funds

4-3/4--5-1/2

5.05 (avg. last four weeks) 1/ Adjusted upward from 6-11 per cent range actually adopted by the Committee to allow for the effect of implementing changes in Regulations D and J--which had not been assumed in the last blue book.

-2(3)

For the combined two-month period, the slower than anticipated

growth in M1 may in part be attributable to the fact that Government deposits in November are running some $2 billion higher on average than assumed in the last blue book.

This change reflects the decision to defer $2.7 billion of

Federal revenue-sharing payments from the end of October to early December. Although deferral of these payments substantially reduced early November drains on its cash balances, the Treasury still raised new money at mid-month and scheduled an additional cash borrowing for payment right after Thanksgiving in order to spread out its fourth quarter financings and minimize their market impact. (4)

With RPD and M1 both tending toward the low ends of their ranges

of tolerance over most of the inter-meeting period, Desk reserve supplying operations resulted in an average Federal funds rate of a little over 5 per cent, little different from the level prevailing when the Committee last met.

Near

the end of the first few statement weeks within the period, however, the funds rate tended to rise rather substantially as reserve settlement pressures on banks unexpectedly cumulated.

During the statement week just past, on the

other hand, the effective funds rate dropped sharply toward the end of the week, as reserve management and float estimates--at both the Desk and banks--were complicated by the changes in Regulations D and J. (5)

The continuing moderate growth of the monetary aggregates and

the underlying stability of the Federal funds rate at levels little higher than 5 per cent helped to reinforce the general improvement of securities market sentiment already being generated by the better prospects for peace in Vietnam and other expectational factors described in the Greenbook.

While yield

declines have been widespread over the period, the largest changes--about 20-25 basis points--have occurred in bond markets.

Treasury bills in the 1-year

maturity range also dropped about 20 basis points, as changing investor ex-

-3pectations led to a flattening of the bill yield curve.

The 3-month bill has

recently traded around 4.75 per cent, down only about 5 basis points since the last meeting.

Other short-term rates are off generally about 1/8 of a

percentage point. (6)

The table on the following page compares recent changes in the

money and credit aggregates (at seasonally adjusted annual rates) with those for selected earlier periods.

-4Most Recent Two Calendar Years Dec. '71 over Dec. '69

Past Year Oct. '72 over

Past 6 Months Oct. '72 over

Past 3 Months Oct. '72 over

Past Month Oct. '72

Oct.

Apr. '72

July '72

Sept. '72

'71

Total Reserves

6.9

9.5

7.1

8.0

15.9

Nonborrowed Reserves

9.0

9.0

4.3

3.6

15.2

Reserves available to support private nonbank deposits

8.3

8.4

8.0

8.2

3.3

1/

6.0

6.5

6.3

5.0

4.0

M 2 (M1 plus time deposits at commercial banks other than large CD's)

13.0

10.2

9.2

8.2

8.1

M3 (M2 plus deposits at thrift institutions)

11.0

12.5

11.3

10.5

10.2

9.3

11.6

10.3

9.7

9.5

10.2

13.0

12.7

14.0

11.4

22.4

8.0

6.0

2.6

0.4

Concepts of Money M 1 (currency plus demand deposits)

Bank Credit

Total member bank deposits (bank credit proxy adj.) Loans and investments of commercial banks 2/ Short-term market paper

(Actual $ change in billions) Large CD's

Nonbank commercial 0.7 -0.3 0.7 2.1 0.3 paper 1/ Other than interbank and U. S. Government. 2/ Based on month-end figures. Includes loans sold to affiliates and branches. NOTE: All items are based on averages of daily figures, except for data on total loans and investment of commercial banks, commercial paper, and thrift institutions--which are either end-of-month or last Wednesday of month figures.

Prospective developments The table below shows three alternative sets of relationships

(7)

among aggregates and money market conditions for FOMC consideration in setting its monetary policy targets (with figures for aggregates representing seasonally adjusted annual rates of growth).

The table on the following page contains,

for a larger number of aggregates, figures for end-of-quarter levels and annual rates of growth for the fourth and first quarters shown separately.

Alt. A

Alt. B

Alt. C

Longer-run targets for aggregates (represented by average growth rates for 4th and 1st quarters combined) 1/ M1

7%

M2

8-1/2 7-1/2

Credit Proxy

8

RPD

6% 8 6-1/2 6-1/2

Associated ranges for November-December '72 Nonborrowed RPD

11-1-1/2--15-1/2

RPD

8--12

M2 Federal funds rate 1/

6-1/2--10-1/2

2--6

7--11

6--10

6--9

5--8

4--7

7--10

6--9

5--8

4 -1/8--5-1/8

4-3/4--5-1/2

5--6

Rounded to nearest 1/2 per cent.

(8)

The alternatives shown are similar to those presented in the

previous blue book.

However, the relationships suggest a somewhat lower level

of interest rates for any given expansion of the aggregates.

We would expect

Alternative Longer-Run Targets r Key Monetary Aggregates M 2

M 1

1972 Sept. Dec. 1973 March

Alt. A

Alt. B

Alt. C

Alt. A

Alt. B

Alt. C

Adjusted Predit Alt. A Alt. B

241.6

241.6

241.6

501.8

501.8

501.8

392.6

392.6

392.6

245.5

245.2

244.9

512.2

511.7

511.0

400.9

400.4

399.8

249.8

248.9

248.0

523.2

521.1

518.4

407.4

405.4

403.0

Proxy

Alt. C

Rates of Growth

1972 4th Q.

6.5

6.0

5.5

8.5

8.0

7.5

8.5

8.0

7.5

1973 1st Q.

7.0

6.0

5.0

8.5

7.5

6.0

6.5

5.0

3.0

Alt. A

Reserves Alt. B Alt. C

Alt. A

RPD Alt. B

Alt. C

33,360

33,360

33,360

30,903

30,903

30,903

Dec.

31,353

31,280

31,231

28,662

28,589

28,341

1973 Jan.

31,335

31,138

30,952

29,189

28,993

28,310

Total

1972 Sept.

Rates of Growth

1972 4th Q.

14.0

1973 1st Q.

--

13.0

12.5

8.0

6.5

-2.0

-3.5

7.5

4.0

-7that the alternative B aggregate objectives could be attained with little change in money market conditions, while the objectives of alternative A would entail easing and those of C tightening. (9)

The strong growth in GNP for the fourth quarter is still expected

by the staff to lead to some pick-up in money demand relative to experience of the preceding few months, which included an October growth rate for M 1 of 4 per cent.

In addition, a sharp drop in Treasury deposits is anticipated

toward year-end, and may lead to a temporary bulge in a money growth.

Such

developments are reflected in the ranges for M1 and other aggregates shown for the Nov.-Dec. period in the table in paragraph (7).

These ranges represent

the staff's best judgment with respect to a path for attaining longer-run objectives while keeping money market conditions from fluctuating unduly. (10)

The specifications for the various alternatives,

accompanying interest rate movements, loan demands;

(b)

assume: (a)

including

continued strong business

fairly aggressive bank efforts to seek funds through CD's,

but a slower rate of growth in the outstanding volume of such instruments following the unusually rapid growth of the second and third quarters; and (c)

slight further slowing in the rate of growth of time and savings deposits

other than CD's in the fourth and first quarters under prevailing money market conditions (although toward the end of the first quarter some of the tax refund money could begin to show up in time deposits). (11)

As noted above, the alternative B targets appear to be con-

sistent with about prevailing money market conditions.

Even with little change

in the Federal funds rate, though, the 3-month bill rate might be expected

-8to rise between now and the next Committee meeting.

In that period,

it may not

quite reach the recent 5--5-1/8 per cent funds rate range, but the bill rate could move above that range by the end of the first quarter of 1973 as the Treasury undertakes large contra-seasonal cash borrowing.

However, recent

greatly improved market psychology, as indicated by the ease with which the market appears to be preparing for the announced auctions totaling $4-1/2 billion of new tax bills, may continue to limit interest rate increases. (12)

Even with some limited rise in short-term rates, long-term

rates would be expected to remain generally stable between now and early 1973 in view of the moderation of long-term credit demands, particularly corporate new issue volume, and the improved market atmosphere.

The Treasury

may take the opportunity presented by favorable markets to undertake some further debt extension around the end of the year. (13)

Under alternative A, the staff would anticipate a decline in

the funds rate, and an accompanying reduction in member bank borrowing, between now and the next meeting of the Committee.

This would very likely lead to

reductions in the bill rate, despite the increase in Treasury borrowing,

and

to further declines in long-term rates. (14)

Under alternative C, the funds rate might be expected to rise

in a 5 to 6 per cent range over the next few weeks. cent growth rate for M1

Attainment of a 5 per

by the first quarter would probably imply a little

further upward movement in the funds rate in the early part of 1973.

Short-

term interest rates generally would be tending to rise as the funds rate moved consistently above 5-1/4 per cent; the rally in long-term markets would

-9certainly end and there could be some sympathetic rise in rates there; and inflows of consumer-type time deposits would begin to slow more noticeably. Under these circumstances, there would undoubtedly be renewed market anticipations of a near-term rise in the discount rate.

-10-

Proposed directives (15)

Presented below are three alternative

formulations

for the operational paragraph of the directive, which might be taken to correspond to the similarly lettered policy alternatives discussed in the preceding section.

In all three alternatives, it is proposed

to retain a reference to bank regulatory changes in light of continuing uncertainties about the multiplier relationship as banks adapt to the new regulations.

Deletion of the reference to credit market develop-

ments is suggested because of the continuance of the more favorable climate in security markets that had emerged at the time of the last Committee meeting.

Deletion of the reference to Treasury financing

operations is proposed since the only offerings in prospect between now and the next meeting are the two already announced tax-anticipation bill auctions, which would not ordinarily require even-keel consideration. If the Treasury were to offer a long-term bond over the next few weeks, it would most likely involve an auction and probably a small issue. Alternative A To implement this policy, while taking account of the Treasury possible] bank regulatory changes, [DEL: effects of RECENT [DEL: financing in developments and operations,

market,] credit

the

Committee seeks to achieve bank reserve and money market conditions that will support SOMEWHAT more moderate growth in monetary aggregates over the months ahead than recorded in the third quarter.

-11-

Alternative B To implement this policy, while taking account of the effects of RECENT [DEL: possible] bank regulatory changes, [DEL: Treasury markets,] credit in developments and operations, financing

the

Committee seeks to achieve bank reserve and money market conditions that will support more moderate growth in monetary aggregates over the months ahead than recorded in the third quarter. Alternative C To implement this policy, while taking account of the

Treasury possible] bank regulatory changes, [DEL: effects of RECENT [DEL: financing markets,] credit in developments and operations,

the

Committee seeks to achieve bank reserve and money market conmore] moderate growth in monetary ditions that will support [DEL: third the in recorded than aggregates over the months ahead [DEL: quarter].

CHART 1

STRICTLY CONFIDENTIAL(FR) 11/17/72

RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS

-33

- 31

'

II I

I I

D I D

1971

I

I M

I

IJ J

S

J

A

1972

*Break in Series Actual Level of RPD After Reduction in Reserve Requirements Effective November 9, 1972 **RPD Adjusted to Remove Discontinuity Introduced by Reduction in Reserve Requirements

S 1972

0

CHART 2

STRICTLY CONFIDENTIAL(FR) 11/17/72

MONETARY AGGREGATES NARROW MONEY SUPPLY M1

BILLIONS OF DOLLARS 6.5% growth for

I

I

I

I

I

:

I

BROADER MONEY SUPPLY M2 1540

8% growth for

1971

1972

J

J

A S 1972

0

N

CHART 3

STRICTLY CONFIDENTIAL(FR)

11/17/72

MONETARY AGGREGATES ADJUSTED CREDIT PROXY

BILLIONS OF DOLLARS

410

/-

400

-400

380 0

360 380

- 340

I

1

I

I I

I

I

I

I

I

/I

I

TOTAL RESERVES

*

(11/15/72 * ®

r

I,

I J971

i 1972

,

I J

J

A

S

1972 *Break in Series; Actual Level of Total Reserves After Reduction in Reserve Requirements Effective November 9, 1972.

0

N

CHART 4

MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS

PER CENT

INTEREST RATES Short-term -

PER CENT

WEEKLY AVERAGES

WEEKLY AVERAGES

-7

WEEKLY

9

--

EURO-DOLLARS

5

1971

)S RATE

1972

FHA MA FN

-

3-MONTH

FEDERAL

INTEREST RATES Long-term

Aaa UTILITY

7

-

-3

-5

1971

1972

NEW ISSUE

....

.

1971

1972

STRICTLY CONFIDENTIAL (FR)

Table 1 Bank Reserves

Period

Reserves Available for Private Nonbank Deposits Not Seasonally Adjusted Seasonally Adjusted Actual Actual and and ctejected Projected (2) (1)

November 17,1972

Aggregate Reserves

Total Reserves (3)

Required Reserves Seasonally Adjusted Time and Nonborrowed Private Reserves Demand Nondeposits (5) (6) (4)

32,830 33,059 33,138 33,382 33,360 33,801 (31,924)

32,728 32,967 32,924 33,016 32,802 33,218 (31,246)

20,874 20,874 21,052 21,131 21,306 21,248 (19,390)

4.3 4.8

7.2 2.2

6.0 6.8

3.3 0.5

8.8 16.4

1972--lst Qtr. 2nd Qtr. 3rd Qtr.

10.8 7.1 10.0

10.1 12.8 3.6

11.0 13.0 -2.0

6.8 4.0 8.3

18.0 14.2 15.4

1972--May June July Aug. Sept. Oct. Nov. Oct.-Nov. 1/ Weekly 1972--June 7 14 21 28

6.2 7.9 8.6 7.5 13.7 3.3 (7.5) (5.5)

6.9 8.4 2.9 8.8 -0.8 15.9 (8.5) (12.0)

7.5 8.8 -1.6 3.4 -7.8 15.2 (5.0) (10.0)

0.9 10.2 4.5 9.9 -3.3 (2.5) (-0.5)

23.6 16.8 10.2 14.8 20.6 10. 6 ( 9.0) (10.0)

1972--May June July Aug. Sept. Oct. p Nov. Annual Rates of Change 1971--3rd Qtr. 4th Qtr.

29,951 30,148 30,365 30,555 30,903 30,987 (29,276)

29,775 29,788 30,166 30,253 30,615 30,856 (29,336)

8,934 9,059 9,136 9,249 9,408 9,491 (9,562)

U.S. Gov't. and Interbank (7) 2,879 2,911 2,774 2,826 2,457 2,814 (2,647)

30,187 30,054 30,322 29,943

29,589 29,606 29,947 29,906

33,217 32,953 33,213 32,761

33,163 32,864 33,158 32,649

20,766 20,912 20,975 20,803

9,024 9,052 9,058 9,092

3,030 2,899 2,890 2,818

July

5 12 19 26

30,449 30,055 30,357 30,475

30,155 29,883 30,239 30,238

33,383 32,671 33,301 33,124

33,119 32,462 33,143 32,968

21,020 20,854 20 983 21,273

9,092 9,119 9,156 9,137

2,934 2,616 2,944 2,649

Aug.

2 9 16 23 30

30,570 30,434 30,563 30,278 30,822

30,373 30,075 30,421 30,027 30,368

33,340 33,368 33,481 33,090 33,544

33,014 33,124 33,125 32,750 33,043

21,149 21,118 21,066 21,048 21,264

9,176 9,217 9,244 9,253 9,293

2,770 2,934 2,917 2,812 2,722

Sept. 6 13 20 27

31,397 30,457 31,025 30,794

30,869 36,104 30,763 30,644

33,775 32,765 33,370 33,398

32,938 32,617 32,586 32,815

21,285 21,277 21,414 21,249

9,331 9,412 9,417 9,445

2,378 2,308 2,345 2,604

Oct.

4 11 18 25

30,925 31,099 30,772 31,076

36,890 30,661 30,891 36,771

33,806 33,828 33,802 33,764

33,379 33,276 33,388 32,837

21,293 21,230 21,241 21,258

9,443 9,461 9,505 9,492

2,882 2,728 3,029 2,688

Nov.

1 8 15

31,046 30,970 29,246

31,118 30,849 29,557

33,810 33,774 31,982

33,209 32,729 31,490

21,236 21,320 19,250

9,539 9,553 9,553

2,764 2,803 2,736

NOTE: Data shown in parentheses are current projections. 1/ At the FOMC meeting October 17, 1972 the Committee agreed on an RPD range of 6 to 11 per cent. Regulations J and D, now effective on November 9, would raise this range to 9 to 14 per cent.

Technical adjustment for the impact of

Table 2

STRICTLY CONFIDENTIAL

Monetary Aggregates (Actual and current projections, seasonally adjusted)

Broad Money Supply (M2 )

Narrow Money Supply (M1 )

Period

(1)

,

(2)

Monthly Pattern in Billions 1972--June July Aug. Sept. Oct. Nov.

236.6 239.4 240.5 241.6 242A. (243.4)

1971--4th Qtr. 1972--lst 2nd 3rd 4th

490.4 495.0 498.3 501.8 505.'2 (507.8)

Annual Percentage Rates of 8.0 1.1

Qtr. Qtr. Qtr. Qtr.

1972--June July Aug. Sept. Oct. Nov. Oct.-Nov.

Adjusted Credit Proxy (3) fDollars 382.4 386.3 389.3 392.6 395.7 (399.6) inge--Quarter 9.7

U.S. Govt. Deposits (4)

5.3 5.3 4.6 5.3 6.4 (8.2)

Total Time and Savings )

290.9 293.7 297.1 300.5 303.5 305.4)

f)

253.8 255,6 257.7 260.2 262.7 (264.5)

37.1 38.1 39.3 40.3 40.7 (40.9)

3.8 3.9 4.2 4.1 4.3 (4.0)

and Month 15.9

14.7

14.8 15.7 13.2 (10.0)

17.1 11.8 10.1 (9.5)

5.6 14.2 5.5

10.6 11.3 8.0

4.0 (5.0) (4.5)

8.1 (6.0) (7.0)

4.7 12.2 9.3 10.2 9.5 (12.0) (10.5)

16.3 11.6 13.9 13.7 12.0 (7 .5) (10.0)

14.8 8.5 9.9 11.6 11.5 (8.0) (10.0)

Weekly Pattern in Billions

Nondeposit Sources of Funds

(7)

11.3 11.1 10.7 (8.0)

8.4

Negotiable CD's

(6)

13.3 8.6 9.3 (8.0)

5.5

November 17, 1972

Time deposits other than CD's

9.3 5.3 8.5 (6.0)

Dollars

1972--June

7 14 21 28

236.6 236.6 237.3 236.1

489.3 490.0 491.5 490.7

383.2 381.6 383.7 381.3

6.9 5.1 5.6 3.3

289.5 290.7 291.2 291.9

252.7 253.4 254.2 254.6

36.8 37.3 37.0 37.3

3.7 3.5 3.8 4.0

July

5 12 19 26

238.0 240.9 239.7 239.5

493.7 495.8 495.0 495.4

384.4 384.4 386.6 388.2

5.4 3.5 5.2 6.2

293.1 292.8 293.5 294.4

255.7 255.0 255.3 255.9

37.4 37.9 38.2 38.5

3.8 3.5 4.1 4.0

Aug.

2 9 16 23 30

239.7 240.1 240.9 240.5 241.2

496.2 497.1 498.6 498.3 499.8

387.5 388.2 389.8 388.7 390.1

5.5 6.0 5.6 3.1 3.4

295.1 295.6 296.5 297.6 298.9

256.5 257.0 257.7 257.8 258.5

38.6 38.6 38.8 39.7 40.4

4.1 4.1 4.1 4.4 4.1

Sept. 6 13 20 27

242.6 241.5 241.6 241.1

502.2 501.2 501.6 501.5

390.9 391.9 393.2 392.4

4.4 4.9 5.9 4.7

299.4 300.1 300.3 301.2

259.6 259.8 259.9 260.4

39.7 40.4 40.3 40.8

4.0 4.1 4.1 4.2

4 11 18 25

241.8

504.0

242.7 242.2 242.3

504.8 504.9 505.4

395.1 394.0 394.6 396.3

6.7 5.2 5.2 6.0

302.6 302.6 303.8 304.1

262.2 262.1 262.7 263.0

40.4 40.5 41.0 41.0

4.2 4.1 4.2 4.5

242.0 242.7 243.3

505.4 506.1 507.6

397.6 397.6 397.5

7.2 8.0 5.9

304.0 304.3 305.0

263A 263A 264.3

Oct.

Nov.

EIOTES:

1 p 8 p 15 pe

I

L _________

- _____________

ppe Data shown in parentheses are c:rrent projections. Annual rates of change other t1in those for the past are rounded to nearest half per cent.

(FR)

-

40.6 41.0 40.8 __________ es~saLeu. e~arcia±iy esilmaea Partially .

4.6 4.0 4.0

STRICTLY CONFIDENTIAL (FR)

NOVEMBER 17, 1972 Table 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted)

Open Market Operations I/ Coupon Agency R's Issues Issues Net

Bills Accet. Mothly 1972 - May June July Aug. Sept Oct Nov Dec. Weekly Sept. 6 13 201 27 Oct.

Nov.

'

4 11 18 25 1 8 15 22 29

180 748 -543 -906 -158 111

12/ -

1,205 -1,205

26 35 22

-331 -228 400

-

34

221

-

-409 -

1 20

444 -119 -238

816 -816

-2,322 -278 1,898 -755 2,155 -1,380 -

-

- 75

3 - 26

.I

221 570

638

22 -1,009 205

-2,731 -

642

.Daily Average Reserve Effect 2/ , Open Market tMember Other 4/ rations Bank Borrowing Factors (6)

469 201 463 -238 -1,617 1,124

- 7 -2,048

375

345 635

2,357

993

819 757

337 -428 -186

1,669 -

-

2

1,989

1,749

9

-1,028 1,084

-1,111 1,081 -3,389

-3,311

_11-

1,386 -

3 -

Total

117 600 -599

.,

10 -25 108 237 76 59

360 -688 568

-232 -449

hin reserve categors req. res. against available res. 5/ U.S.G. and interb. (6)+(7)(8)-(9)

(9) Ila7

-131 42 337 194 232 318

- 89

135 1,370 -378

31 1,894 -416 -432

-117 -162 155

501 -765 659 -119

331

-201 -457 917 -688

432 208 158 -423

246 -229 230 -120

-209p 402p -464p

310p 0 2 -1, 9 p -471p

-167

-114 99 -101

....

I ........

Targ avallable reserves 5

- 77

34 7

-129 p 176 p 4 -2 0p

p -266p -1,294p

I

Represents change in System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill auctions. Represents change in daily average level from preceding period. Includes matched sale-purchase transactions as well as RP's. Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, and other FR accounts Reserves to support private nonbank deposits. Target change for October and November reflects the mid-point of the target range adopted at the October 17, 1972 FOMC meeting. Target change for previous months reflects the bluebook patterns that are consistent with the mid-points of target ranges that were adopted during the month.

II

STRICTLY CONFIDENTIAL (FR) NOVEMBER 17,

1972

Table 4 SECURITY DEALER POSITIONS AND BANK RESERVES Millions of Dollars

U S. Govt. Security ealer Positions Bills Coupon Issues

Period

Other Security Dealer PositionsMember Corporate Municipal ,Bonds Bonds

Excess Reserves

Member Bank Reserve Positions Bnk Reserve Positon Borrowings Net Free Basic Reperve Deficit at FRB Reserves 8 New York 1 38 Other

(1)

(2)

(3)

1971 -- High LOw

4,733 1,350

2,834 343

337 0

556 30

590 - 61

1,180 84

202 -988

-4,714 -1,545

-5,499 -2,569

1972 -- High Low

4,291 1,916

1,585 -93

235 0

316 40

796 -133

958 12

380 -852

-4,923 -1,638

-4,833 -1,910

1971 -- Oct. Nov. Dec.

2,263 2,417 2,544

1,521 2,462 1,761

173 201 170

246 328 251

207 263 165

360 407 107

-153 -144 50

-2,436 -3,056 -2,791

-4,258 -4,063 -4,375

1972 -- Jan. Feb. Mar.

3,004 2,408 3,489

1,416 1,176 604

135 149 101

206 136 185

173 124 249

20 33 99

153 91 150

-2,667 -3,203 -3,208

-4,192 -3,072 -3,522

Apr.

2,612

274

46

99

136

109

27

-3,026

-3,299

May

2,792

675

123

134

104

119

- 15

-2,625

-2,652

June

2,694

205

87

260

204

94

110

-2,828

-2,864

July

2,262

97

142

166

147

202

- 55

-2,945

-2,603

Aug. Sept.

2,643 4,099

692 170

114 53

176 174

255 162

438 514

-183 -352

-3,913 -3,835

-2,801 -4,024

*2,887

*207

105

132

2 3

574p

-341p

-3,637

-4,044

4,223 4,291 4,262 3,831

314 239 123 64

103 58 35 15

204 202 163 73

796 -115 281 37

837 149 717 550

- 41 -264 -436 -513

-3,403 -4,499 -4,350 -3,180

-3,591 -4,719 -4,425 -3,717

170 60 197 282

51 59 145 235

51 166 193 149

230 358 109 150

436 535 434 765

-206 -177 -313 -615

-3,248 -4,292 -4,319 -2,900

-3,354 -4,822 -4,445 -3,858

173 254 10 5p

267

5 56

-289p u852p 85p

-3,272 -4,589p -4,923p

-3,225 -3,6 20p

Oct. 1972 -- Sept. 6 13 20 27

Notes:

Oct.

4 11 18 25

3,507 2,904 2,452 *2,734

*

Nov.

I 8 15 22 29

*3,114 *2 ,520r *2,531

* 328 *1,095r *1,117r

0 31 30p

(4)

(5)

3p

p 106p 5 79p

(6)

p 958p 494p

(7)

(8)

(9)

-3,653p

Government Security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury bills financed by repurchase agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security dealer positions are debt issueSstill in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at Federal Reserve less net Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate and municipal issues in syndicate which are Friday figures. *STRICTLY CONFIDENTIAL

CONFIDENTIAL

(FR)

NOVEMBER 17,

1972

Table 5 SELECTED INTEREST RATES Per Cent

Short-term

Per Period

Federal Fu

Treasur _90-day

(1)

(2)

-- High Low

5.73 3.29

5.47

1972 -- High

1971

_Lon-term

90-

da

New Issue

Municipal

CD's Aaa Utility*

Prme-NY

Bond Buyer

G

( st (10-r. Cnstant Maturity)

FNMA Auction Yields

(6)

(7)

5.75 3.63

8.26 7.02

6.23 4.97

8.07 7.32

5.25 3.75

5.25 3.50

7.60 7.08

5.54 4.99

7.72 7.54

4.75 4.49 4.40

5.42

7.50 7.38 7.28

5.06 5.20

7.84

4.66

5.22 4.78 4.58

5.21

7.71 7.62

3.38 3.20 3.73

3.82 4.06 4.43

4.03 3.81 4.10

3.81 3.53 3.98

7.21 7.34 7.24

5.12 5.29 5.31

7.61 7.61 7.55

4.17 4.27 4.46

3.71 3.69 3.91

4.65 4.46 4.71

4.55 4.45 4.60

4.47 4.33 4.50

7.45 7.38 7.32

5.43 5.31 5.34

7.58 7.63 7.62

July Aug. Sept.

4.55 4.80 4.87

3.98 4.02 4.66

4.90 4.90 5.44

4.83 4.75 5.07

4.75 4.78 5.00

7.38 7.37 7.40

5.41 5.30 5.36

7.62 7.63 7.64

Oct.

5.04

4.74

5.39

5.21

5.19

7.38

5.19

7.71

6 13 20 27

4.89 4.69 4.93 4.99

4.62 4.72 4.66 4.65

5.32 5.39 5.45

5.00 5.00 5.00 5.00

7.38 7.34 7.42

5.39 5.38 5.37 5.30

6.51 6.55 6.57 6.58

7.63

5.52

5.00 5.00 5.08 5.13

4 11 18 25

5.15 5.69 4.91 5.01

4.60 4.74 4.81 4.74

5.48 5.41 5.40 5.35

5.13 5.25 5.25 5.25

5.13 5.13 5.25 5.25

7.44 7.48 7.30 7.34

5.22 5.16 5.23 5.13

6.53 6.49 6.48 6.43

7.69

1 8 15 22 29

5.06 5.25 4.89

4.74 4.71 4.74

5.34 5.17 5.18

5.15 5.13 5.13

5.13 5.13 5.13

7.27

5.04

6.37 6.29 6.25 p

7.72

(4) 5.88

3.32

4.00

5.25 3.18

4.81 3.03

5.52 3.60

5.20 4.91 4.14

4.46 4.22 4.01

Mar.

3.50 3.29 3.83

Apr. May June

-- Oct. Nov.

-- Jan.

Feb.

1972 -- Sept.

Oecr.

Nov.

~--~----Notes:

Paper

-year

(3)

Dec. 1972

90-119 day Commercal

5.94 3.53

Low 1971

bills

-"-

4.85

' '

(5)

7.44

5.10 7.12p

"

5.01

(9)

7.65

7.72

7.71

"

For columns 6 and 8 the weekly data is Column 5 is a one-day Wednesday quote. Weekly data for columns 1 to 4 are statement week averages of daily data. Column 7 is a one-day quote for the Thursday following the end of the statement week. the mid-point of the calendar week over which data are averaged. Column 9 gives FNMA auction data for the Monday preceding the and of the statement week. The PNMA auction yield is the implicit yield in weekly or bi-weekly auction for short-term forward commitments for Government underwritten mortgages. *New series--Corporate New Issues Aaa serips discontinued.

Appendix Table I

CONFIDENTIAL

RESERVES AND MONETARY VARIABLES

Reserves

Period

Total (1)

Nonborrowed (2)

Money Stock Measures Available to Support Pvt. Deposits (3)

An:nually

1 (4)

M2 (5)

M3 (6)

Bank Credit Measures Adjusted Total Credit Loans and Investments Proxy (7) (8)

November

Total Time (9)

Time Other than CD's (10)

Other Thrift Institution Deposits (11)

(Per Cent Annual Rates of Growth)

(FR)

17,1972

Nondeposit Funds (13)

CD's (12)

U.S. Gov't. Demand (14)

(Dollar Change in Billions)

+7.6 -1.2 +6.0 +7.3

+5.6 -2.7 +9.2 +8.0

+8.6 -2.7 +8.1 +7.8

+7.8 +3.2 +5.4 +6.2

+9.3 +2.3 +8.1 +11.1

+8.3 +2.8 +7.8 +13.3

+9.7 +0.6 +8.3 +9.5

+11.0 +3.9 +8.1 +11.3

+11.3 -4.9 +17.9 +17.9

+11.1 +1.4 +11.0 +16.2

+6.4 +3.4 +7.7 +17.5

+2.8 -12.6 +14.5 +7,9

+2.6 +13.0 -8.4 -7.6

-0.1 +0.3 +1.1 -0.3

1st Half 1970 2nd Half 1970

+0.4 +11.6

+3.0 +15.2

+5.2 +10.6

+5.6 +5.2

+5.8 +10.1

+5.0 +10.3

+4.8 +11.4

+5.2 +10.8

+8.4 +26.3

+6.0 +15.6

+4.7 +10.6

+2.6 +11.9

+0.7 -9.1

+0.4 +0.7

1st Half 1971 26d Half 1971

+9.6 44.7

+9.3 46.5

+10.9 +4.6

+10.0 +7.4

+15.5 +6.3

+17.0 +8.8

+9.7 +8.8

+11.5 +10.6

+22.3 +12.2

+21.2 +10.1

+20.1 +13.5

+3.9 +4.1

-7.1 -0.4

-2.1 +1.8

lat Half 1972

+11.6

+12.1

+9.0

+7.4

+11.1

+13.4

+11.3

+12.8

+15.6

+14.7

+17.9

+3.7

-0.3

-0.8

+8.9 +10.0 +7.2 +2.2 +10.1 +12.8 +3.6

+9.5 +9.0 +6.0 +6.8 +11.0 +13.0 -2.0

+10.8 +10.6 +4.3 +4.8 +10.8 +7.1 +10.0

+9.1 +10.6 +3.7 +1.1 +9.3 +5.3 +8.5

+18.1 +12.4 +4.4 +8.0 +13.3 +8.6 +9.3

+18.9 +14.4 +7.8 +9.6 +15.5 +10.8 +11.6

+10.9 +8.4 +7.6 +9.7 +11.3 +11.1 +10.7

+12.3 +10.3 +9.7 +11.1 +15.7 +9.5 +13.6

+28.8 +14.7 +8.2 +15.9 +14.8 +15.7 +13.2

+27.5 +14.0 +5.3 +14.7 +17.1 +11.8 +10.1

+21.9 +17.3 +13.7 +12.8 +20.5 +14.5 +15.6

+2.6 . +1.3 1 +2.3 +1.8 -0.1 +3.7 +3.2

-4.6 -2.6 -0.4 --0.3 -+0.3

-2.4 +0.3 +2.3 -0,4 -0.1 -0.8

1968 1969 1970 1971 Semi-Annually:

1

Ouarterly: 1st 2nd 3rd 4th 1st 2nd 3rd

Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.

1971 1971 1971 1971 1972 1972 1972

1971:

July Aug. Sept. Oct. Nov. Dec.

+4.4 +4.1 +12.9 -7.4 +3.4 +10.7

-7.6 +2.8 +22.9 -2.8 +2.0 +21.4

+6.8 +6.9 -0.8 +3.6 +5.9 +4.8

+10.1 +3.2 -2.1 +0.5 -+2.6

+7.5 +2.9 +2.9 +7.1 +6.5 +10.2

+10.5 46.6 +6.2 +9.1 +8.7 +11.0

+10.7 +4.1 +7.9 +4.8 +11.2 +13.1

+6.2 +11.9 +10.9 +11.9 +6.2 +14.9

+9.4 +4.2 +10.7 +17.1 +9.1 +20.8

+4.8 +3.2 +7.9 +13.7 +13.0 +17.0

+16.7 +10.3 +13.8 +13.0 +11.4 +13.7

+1.1 +0.4 +0.8 +1.1 -0.5 +1.2

-0.2 -0.4 +0.1 +0.8 +0.5 -1.3

+0.8 +0.6 +0.9 -1.9 +0.7 +0.8

1972:

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. p

+20.2 -5.9 +15.8 +22.9 +6.9 +8.4 +2.9 +8.8 -0.8 +15.9

+23.1 -3.6 +13.3 +22.2 +7.5 +8.8 +1.6 +3.4 -7.8 +15.2

+9.2 +7.4 +15.6 +7.0 +6.2 +7.9 +8.6 +7.5 +13.7 +3.3

+3.2 +12.6 +11.9 +7.7 +2.6 +5.6 +14.2 +5.5 +5.5 +4.0

+13.4 +14.3 +11.6 +7.2 +7.7 +10.6 +11.3 +8.0 +8.4 +8.1

+15.4 +16.7 +13.8 +10.9 +9.7 +11.5 +13.5 +10.7 +10.4 +10.2

+9.9 +5.9 +17.7 +13.5 +14.7 +4.7 +12.2 +9.3 +10.2 +9.5

+14.2 +12.4 +19.9 +5.4 +70.0 +2.3 +10.2 +18.3 +11.9 +11.4

+20.0 +16.2 +7.8 +12.4 +17.8 +16.3 +11.6 +13.9 +13.7 +12.0

+24.4 +15.4 +10.8 +7.8 +12.6 +14.8 +8.5 +9.9 +11.6 +11.5

+23.9 +17.6 +19.0 +15.8 +10.6 +16.6 +18.3 +12.3 +15.5 +12.4

-0.2 +0.6 -0.4 +1.3 +1.6 +0.8 +1.0 +1.2 +1.0 +0.4

-0.1 -0.3 +0.1 -0,2 +0.2 -+0.1 +0.3 -0.1 +0.2

+0.1 -2.6 +2.4 +1.3

NOTE:

Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, October 1, 1970.

p - Preliminary n.a.- Not available.

and requirements on bank-related commercial paper are included beginning

-2.1 -

-0.7 +0.7 +0.7

Appendix Table II RESERVES AND MONETARYVARIABLES (Seasonally adjusted, Billions of dollars)

CONFIDENTIAL (FR) November 17,

C--=

Period

--- r--I

Keserves

Total

Nonborrowed

(1)

(7)

Available to Support Pvt. Deposits

a

-z'----

Money Stock Measures M

M1 Total

Pvt.

M3

Dep.

(3)

(6)

(7)

.~-----r-

-

uther

Bank Credit Measures Adjusted Credit Proxy

Total Loans and Investments

(8)

(9)

1972

Time Total Time

Other than CD's (11)

Thrift Institution Deposits (12)

CD's (13)

NonDeposit Funds

U.S. Gov't Demand

(14)

(15)

Afinually: iec.

27.249 27.977 29.132

26,471 26.829 28.764

24,963 25.245 26.747

197.4 203.7 214.8

154.0 157.7 165.8

378.0 368.8 418.2

572.6 588.3 634.0

304.6 305.4 330.6

390.6 406.0 438.9

204.2 194.1 228.9

180 6 183.2 203.4

194.6 201.5 215.8

23.6 11.0 25.5

7.0 20.0 11.5

5.1 5.3 6.4

29.390 29,600 29.779

28.958 29.240 29.445

26.930 27.132 27.470

215.3 217;7 219.7

166.0 168.0 169.7

423.1 430.4 437.1

642.2 653.4 663.9

333.4 336.7 339.6

443.6 449.0 452.4

234.4 240.2 245.4

207.8 212.7 217.4

219.2 223.0 226.8

26.6 27.5 28.1

10.1 8.6 7.0

5.8 4.9 4.0

Apr. May JTn e

29.991 30.327 30.527

29.859 30.106 30.106

27.735 27.935 28.199

221.2 223.8 225.5

170.7 173.0 174.5

441.5 446.6 450.6

672.5 681.0 687,8

342.0 344.5 346.7

455.2 458.9 464.1

248.1 251.3 254.4

220.3 222.8 225.0

231.0 234.4 237.2

27.8 28.5 29.4

5.1 4.1 4.5

5.6 5.4 4.3

July Aug. Sept.

30.639 30.743 31.073

29.915 29.985 30.556

28.358 28,521 28.503

227.4 228.0 227.6

175.8 176.3 175.5

453.4 454.5 455.6

693.8 697.6 701,2

369.8 351.0 353.3

466.5 471.1 475,4

256.4 257.3 259.6

225.9 226.5 228.0

240.4 243.1 245.6

30.4 30.8 31.6

4.3 3.9 4.1

5.1 5.7 6.6

Oct. Nov. Dec.

30.882 30.970 31,246

30.485 30.535 31.079

28.588 28.728 28,844

227.7 227.7 228.2

175.5 175.5 175.7

458.3 460.8 464.7

706.5 711.6 718.1

354.7 358.0 361.9

480.1 482.6 488.6

263.3 265.3 269.9

230.6 233.1 236.4

248.3 250.8 253.4

32.7 32.2 33.4

4.8 5.4 4.0

4.7 5.4 6.2

1972--Jan. Feb. Mar,

31.772 31.616 32.032

31.678 31.582 31.931

29.064 29.244 29.625

228.8 231.2 233.5

176.0 178.0 S179.9

469.9 475.5 480.1

727.3 737.4 745.9

364.9 366.7 372.1

494.4 499.5 507.8

274.4 278.1 279.9

241.2 244.3 266.5

257.4 261.8 265. B

33.2 33.8 33.4

4.0 3.6 3.7

6.3 3.7 6.1

May Julne

32.643 32.830 33.059

32.525 32.728 32.967

29.798 29.951 30.148

235.0 235.5 236.6

180.9 181.1 181.9

483.0 486.1 490.4

752.7 758.8 766.1

376.3 380.9 382.4

510.1 518.6 519.8

282.8 287.0 290.9

248.1 250,7 253.8

269.7 272.6 275.7

34.7 36.3 37.1

3.5 3.7 3.8

7.4 7.4 5.3

July Aug. Sept. Oct. p

33.138 33.382 33.360 33.801

32.924 33.016 32.802 33.218

30.365 30.555 30.903 30.987

239.4 240.5 241.6 242.4

184.5 185.5 186. 1 186.6

495.0 498.3 501.8 505.2

774.7 781. 6 788.4 795.1

386.3 389.3 392.6 395.7

524.2 532.2 537.5 542.6

293.7 297.1 300.5 303.5

255.6 257. 7 260.2 262.7

279.7 283.3 286.6 289.9

38.1 39.3 40.3 40.7

3.9 4.2 4.1 4.3

5.3 4.6 5.3 6.1

2 9 16 23 30

33.340 33.368 33.481 33.090 33.544

33.014 33.124 33.125 32.750 33.043

30.570 30.434 30.563 30.278 30.822

239.7 240.1 240.9 240.5 241.2

184.8 185,0 185.9 185.3 186.1

496.2 497.1 498.6 498.3 499.8

Sept. 6 13 20 27

33.775 32. 765 33.370 33.398

32,938 32.617 32.586 32.815

31.397 30.457 31.025 30.794

242.6 241.5 241.6 241.1

187.3 186.0 186.1 185.5

502.2 501.2 501.6 501.5

Oct.

33.806 33.8 2 33.802 33.764

33.379 33.276 33.388 32.837

30.925 31. 099 30.772 31.078

241.8 242.7 242.2 242.3

186.3 186.8 186.3 186.3

504.0 504.8 504.9 505.4

I p

33.810

33.209

8p

33.774

32.729

31.046 30.970

186.2 186.5

505,4 506.1

bec. ee.

1968 1969 1970

NO' t ill,1 : 1971--Jan. Feb. Mar.

1972- Aug.

ov.

NOTES:

4 11 18 25

242. 242.7

I... ... ...

... .. .. 295.1 295.6 296.5 297.6 298.9

256.5 257.0 257.7 257.8 258.5

38.6 38.6 38.8 39.7 40.4

4.1 4.1 4.1 4.4 4.1

5.5 6.0 5.6 3.1 3.4

390.9 391.9 393.2 392.4

299.4 300.1 300.3 301.2

259.6 259.8 259.9 260.4

39.7 40.4 40.3 40.8

4.0 4.1 4.1 4.2

4.4 4.9 5.9 4.7

395.1 394.0 394.6 396.3

302.6 302.6 303.8 304.1

262.2 262.1 262.7 263.0

40.4 40.5 41.0 41.0

4.2 4.1 4.2 4.5

6.7 5.2 5.2 6.0

40.6 41.0

4.6 4.0

7.2 8.0

387.5 388.2 389.8 388.7 390.1

397.6 397.6

304.0 304.3

263.4 263.4

I LI ____ J____ J ______ . £ ________ -t...& I I Reserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements on bank related commercial paper are included beginning commercial paper, and Euro-dollar October 1, 1970. Adjusted credit proxy includes mainly total member banks deposits subject to reserve requirements, bank-related nonbank commercial paper figures which borrowings of U.S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily averages except for Weekly data are not available for M3, total loans and investments and thrift institution deposits. are for last day of month.

p - Preliminary.