bluebooks · September 17, 1979

Bluebook

Prefatory Note

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 this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act.

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September 14, 1979

Strictly Confidential (FR)

Class I FOMC

MONETARY AGGREGATES AND MONEY MARKET CONDITIONS

Prepared for the Federal Open Market Committee By the staff

Board of Governors of the Federal Reserve System

STRICTLY CONFIDENTIAL CLASS I - FOMC

(FR)

September 14,

1979

MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1)

Over the August-September period growth of M-1 is projected

to be above the upper end of the Committee's 4 to 8 percent range, while M-2 growth is expected to be close to the upper bound of its 7 to 11 percent FOMC range.

M-1 growth slowed to a 6¾ percent annual rate in

available data suggest a more rapid expansion in September.

August, but

Savings

deposits at banks increased in August for the third consecutive month,

though not as rapidly as in July, and the rate of expansion

appears to be slowing further in September.

Small time deposits posted

another strong gain last month; large time deposits included in M-2 advanced at about the same pace in August as in July, after the outstanding level had declined sharply over the second quarter.

Deposit inflows

to thrift institutions are estimated to have picked up a bit in August on a month-end basis. Comparison of FOMC Policy Ranges for August-September to Latest Staff Estimates Ranges

Latest Estimates

M-1

4 to 8

8.4

M-2

7 to 11

10.9

Federal funds rate (percent per annum)

1/10¾ to 11½

Avg.

for statement

week ending

Aug. 15

10.80

22 29 Sept. 5 12

11.04 11.16 11.02 11.30

On August 30, the FOMC voted to raise the upper limit of the intermeeting range for the Federal funds rate from 11¼ percent to 11½ percent.

(2)

Bank credit expansion slowed to about a 10 percent annual

rate in August, as holdings of Treasury securities were reduced and growth in total loans dropped off somewhat.

Growth in business loans was down

from July but in line with that for the second quarter, while expansion in real estate loans picked up for the third consecutive month.

To help

finance their credit expansion, banks sold $2¼ billion of large time deposits and raised about $4 They also raised about $3

billion from domestic nondeposit sources.

billion net through their foreign affiliates,

a significant part of which likely reflected recycling of U.S. resident deposits in offshore banks. (3)

Following the August 14 FOMC meeting, the Account Manager

began aiming for a Federal funds rate of 11 percent, up from the 10-5/8 to 10

percent area, and on August 17 the discount rate was raised

point to 10

percent.

percentage

In the latter part of August, with projections for

the monetary aggregates suggesting that M-1 growth would be above the upper end of its range and M-2 growth just below the upper bound of its range, the Account Manager began to seek an 11¼ percent funds rate, the top of the range specified by the Committee.

On August 30, as projections

for the aggregates strengthened, the FOMC moved the upper end of the intermeeting range to 11

percent with the understanding that the Account Manager

would not raise the objective for the weekly average funds rate to the new upper limit immediately but would be guided by the subsequent behavior of the monetary aggregates and by developments in foreign exchange markets.

The

Desk has since been aiming for a funds rate in the 11-3/8 percent area. (4)

Over the August-September period, total member bank reserves

are expected to grow at about an 8¾ percent annual rate.

September will be

-3the third straight month in which total reserves have expanded, after having declined over the first half of the year.

The monetary base--reflecting

the rapid growth of currency--is projected to expand at about a 13 percent annual rate over the two-month policy period.

Member bank borrowing has

been fairly stable in the neighborhood of $11/4 billion since the August Committee meeting. (5)

In response to the System's tightening actions, short-term

interest rates have generally advanced about 3/4 to 1 1/2 percentage points over the intermeeting period, and long-term bond yields have moved up 25 to 45 basis points.

The relatively sharp response of market interest rates

appeared to reflect anticipations of further tightening by the System in the face of continued rapid inflation and monetary growth.

Strong

credit demands by businesses contributed to pressures in short-term markets with nonfinancial firms issuing a near record volume of commercial paper as well as borrowing heavily at banks.

Over the intermeeting period, the

Treasury sold $2 billion of cash management bills and added $200 million to each weekly bill auction; it also offered $2.5 billion 4-year 8-month notes. Conventional mortgage rates have also risen in recent weeks, reflecting the continued slow growth of deposits at thrift institutions and rising costs of funds. (6)

The dollar's weighted average exchange value has changed little

since the August FOMC meeting, with a rise against the yen and sterling about offsetting declines against other major currencies.

-4-

(7)

The table on the next page shows seasonally adjusted annual

rates of change, in percent, for selected monetary and financial flows over various time periods.

-5-

1977 & 1978 Average

Past Twelve Months Aug. '79 over Aug. '78

Nonborrowed reserves

4.9

0.5

1.0

13.1

10.1

Total reserves

6.0

0.4

1.6

5.8

7.3

Monetary base

8.7

7.3

7.1

9.8

12.1

(Currency plus demand deposits 1/)

7.6

4.9

8.7

10.6

6.8

(M-1 plus savings deposits at commercial banks, NOW accounts at banks and thrift institutions, credit union share draft accounts, and demand deposits at mutual savings banks)

7.4

2.5

6.2

9.7

6.5

Past Six Months Aug. '79 over Feb. '7 9

Past Three Months Aug. '79 over May '79

Past Month Aug. '79 over July '79

Concepts of Money M-1

M-1+

M-2

(M-I plus time deposits at commercial banks other than large CD's)

9.1

7.7

10.4

12.8

10.9

M-3 (M-2 plus deposits at thrift institutions)

10.5

S.3

9.2

11.1

9.6

M-4 (M-2 plus CD's)

10.3

6.8

6.0

9.8

11.7

M-5 (M-3 plus CD's)

11.1

7.8

6.7

9.3

10.1

12.3

13.5

11.3

12.2

10.1

Large CD's

1.4

-0.1

-2.7

-1.6

1.2

Nonbank commercial paper

0.2

0.7

1.2

1.4

Bank Credit Loans and investments of

all commercial banks 2/ Short-term Market Paper (Monthly average change in billions)

1/ Other than interbank and U.S. Government. 2/ Includes loans sold to affiliates and branches. NOTE: All items are based on averages of daily figures, except for data on total loans and investments of commercial banks, commercial paper, and thrift institutions--which are derived from either end-of-month or Wednesday statement date figures. Growth rates for reserve measures in this and subsequent tables are adjusted to remove the effect of discontinuities from breaks in the series when reserve requirements are changed.

Prospective developments (8)

Three alternative specifications for the monetary aggregates

and the Federal funds rate for the September-October period are shown below for Committee consideration.

The Federal funds rate specifications of

alternative B are centered on the currently prevailing 11¼ to 11½ percent range. Money market conditions would be respectively eased or tightened under alternatives A and C.

(More detailed and longer-term data are

contained in the tables on pages 7 and 8.) Alt. A

Alt. B

Alt. C

M-1

5½ to 9½

5 to 9

4½ to 8½

M-2

8 to 12

Ranges for Sept.-Oct.

Federal funds rate (Intermeeting period) (9)

10½ to 11¼

7½ to 11½

11 to l1¾

7 to 11

11½ to 12¼

Under alternative B, M-1 would be expected to expand in a 5 to

9 percent annual rate range over the September-October period, down from the 10 percent average pace of the preceding five months.

Growth is expected to

be slower in October than in September.and continued relatively moderate growth is projected over the balance of the year.

The expected deceleration

reflects the lagged effects of the tightening of money market conditions this summer and the reduction in transactions demand for money associated with the projected slowing of nominal GNP growth in the months ahead. (10) Under alternative B, M-1 in October would be considerably above the level implied by the upper end of the Committee's stated 1½ to 4½ percent growth range for the QIV '78 to QIV '79 period, as shown in the upper panel of the chart on page 10.

However, as is indicated in the lower

Alternative Levels and Growth Rates for Key Monetary Aggregates M-1 1/

M-2

Alt. A

Alt. B

Alt. C

August September October

374.2 377.4 378.9

374.2 377.3 378,6

374.2 377.2 378.3

922.4 931.0

1978

QIV

361.0

1979

359.1 365.9 380.1

359.1 365.9 374.5 380.1

10.3 4.8

9.9 4.1

-2.1 7.6 9.5 5.9

-2.1

1979

QII QIII QIV

374.6

Alt. A

Alt. B

Alt. C

937.5

922.4 930.7 936.8

922.4 930.4 936.1

361.0

873.2

359.1 365.9 374.5 380.1

877.1 896.0 922.5 943.2

877.1 896.0 922.4 942.9

877.1 896.0 922.3 942.5

11.2 8.4

10.8 7.9

10.4 7.4

1.8 8.6 11.8 9.0

1.8 8.6 11.8 8.9

1.8 8.6 11.7 8.8

5.2 10.5

5.2 10.4

Growth Rates Monthly:

1979

September October

Quarterly Average: 1979

QI QII QIII

QIV

7.6 9.4 6.0

-2.1 7.6 9.4 6.0

2.7 7.8

5.3

Semi-Annual: QIV '78-QII '7 9 QII '79-QIV '79

5.2 10.5

Annual: QIV '78-QIV '79 _

8.0

1/ The staff has assumed that over the longer-run policy period from QIV '78 to QIV '79 M-1 growth will be reduced by about 1½ percentage points by ATS.

-8Alternative Levels and Growth Rates for Key Monetary Aggregates (cont'd) M-3

Bank Credit

Alt. A

Alt. B

Alt. C

Alt. A

Alt. B

Alt. C

August September October

1579.5 1592.5 1603.2

1579.5 1592.1 1602.1

1579.5 1591.6 1601.2

1104.7 1114.0 1122.3

1104.7 1113.7 1121.8

1104.7 1113.4 1121.3

1978

QIV

1492.7

1009.2

1979

QI QII QIII QIV

1510.3 1540.0 1579.6 1612.8

1510.3 1540.0 1579.5 1612.0

1510.3 1540.0 1579.3 1611.3

1044.2 1073.4 1104.7 1129.9

1044.2 1073.4 1104.6 1128.9

1044.2 1073.4 1104.5 1127.8

1979

Growth Rates Monthly: 1979

September October

9.2 7.2

10.1 8.9

4.7 7.9 10,2 8.1

13.6 11.2 11.7 9.1

13.6 11.2 11.6 8.8

13.6

6.3 9.3

12.6 10.5

12.6 10.3

12.6 10.1

7.9

12.0

11,9

11.8

Quarterly Average: 1979

QI QII QIII QIV

4.7 7.9 10.3 8.4

4.7 7.9 10.3 8.2

11.2

11.6

8.4

Semi-Annual: QIV '78-QII '79 QII '79-QIV '79

Annual: QIV '78-QIV '79

8.0

panel of the chart, when the Committee's longer-run range is adjusted to reflect the downward revision in the staff's estimate of ATS/NOW effects on M-1, the projected October level of M-1 under alternative B is within, though in the upper half of, its adjusted 3 to 6 percent longer-run range.

The

same would be true for alternatives A and C. (11)

M-1 growth is expected to remain within its adjusted longer-run

range over the balance of the year.

Expansion of M-1 in the fourth quarter is

projected to be at about a 6 percent annual rate, even assuming some slight decline in interest rates later in the year.

Growth in M-1 over the one

year QIV '78-QIV '79 period would then be about 5¼ percent, in the upper half

of the adjusted range.(12)

M-2 growth also is projected to decelerate under alternative

B, expanding at a 7 to 11 percent annual rate during the September-October period.

Most of the slowdown reflects the moderation of M-1 growth, but,

in light of the current higher level of market interest rates, the rate of expansion of savings and small time deposits subject to fixed rate ceilings is expected to moderate.

However, commercial banks should continue to

capture a relatively large proportion of flows into 6-month MMCs.

With

loan demands likely to moderate only slightly in the near term, banks are also expected to continue to issue large time deposits and borrow from

The FOMC's long-run M-1 growth range of 1½ to 4½ percent for 1979 assumed, when originally set in February, that ATS effects would reduce M-1 growth by 3 percentage points. In July, when the range was readopted, it was estimated that ATS effects for the year would be about At present, we estimate that such ATS effects will half as large. reduce measured M-1 growth by a little less than 1½ percentage points. On this basis, an adjusted range of 3 to 6 percent, or even a little higher, would be comparable with 1½ to 4¼ percent.

If M-1 expanded at an 8¾ percent annual rate in the fourth quarter, the growth in this aggregate in 1979 would be at the upper end of its adjusted longer-run range.

Growth Ranges and Actual M-1 LONGER-RUN RANGE REFLECTING 3 PERCENTAGE POINT IMPACT FROM ATS ASSUMED IN FEB. '79

Billions of dollars 385

Alt. B Short-Run Range --

Q4 '78-Q4 '79 9%

380

375

370

365

360

4/t%

355

.ONGER-RUN RANGE REFLECTING 1

350

PERCENTAGE POINT IMPACT FROM ATS AS CURRENTLY ASSUMED 385 Q4 '78-Q4 '79

Alt. B Short-Run Range--

380

-375 __3% """

370

-365

-360

-355

I O

1978

I 3

i A

i M

1979

I S

350 D

Growth Ranges and Actual M-2 and M-3

M-2 Current Longer-Run Range --Alt. B Short-Run Range -

Billions of dollars 950

'78-Q4 '79

11MA%,.

940

-930

-920 5%

910

-900

-890

-880

-870

Current Longer-Run Range ----Ait. B Short-Run Range

860

1640

Q4 '78-Q4 '79

1620 10'%

1600

6 A%

;1580

1560

1540

1520

1500

i N

1978

1979

1 II

I J

I I N

1480 D

-12abroad.

S&L and MSB deposit inflows are projected to continue sluggish,

despite their likely further use of large time deposits. (13)

As shown in the upper panel of the chart on page 11, growth

in M-2 under alternative B would place that aggregate in October around the upper end of its 5 to 8 percent longer-run range for the QIV '78 to QIV '7 9 period.

And for the one-year period, staff projections indicate that M-2

will grow at a rate about equal to the upper limit.

Largely reflecting

the slow deposit growth at thrifts because of the absence of the MMC interinstitutional ceiling rate differential at current and projected rates of interest, M-3 growth is expected to remain within its longer-run range, though in the upper half. (14)

There may still be some expectation in the market that the

Federal funds rate will rise over the near term.

Thus, if funds continue

to trade around the prevailing 11-3/8 percent--the midpoint of the alternative B range--both short- and long-term market rates could decline.

However, any

such movement is likely to be limited since aggregate credit demands are expected to remain strong in the weeks ahead, before edging off later in the year as economic activity weakens.

Business credit demands are likely

to continue to be substantial in the very near term, mainly in short-term markets.

In addition, the amount of cash raised by the Treasury in the

market over the next month is expected to remain near recent levels, with the sale of $1

to $2 billion of 15-year bonds and $200 million add-ons to

weekly bill auctions.

In the near term, new issues of municipal bonds are

likely to continue sizable, given the large volume of mortgage revenue bonds still in the pipeline.

With the Federal funds rate unchanged and no

significant decline expected in other money market rates, adoption of

-13Alternative B should in itself have no substantial impact on the value of the dollar in exchange markets. (15)

Alternative A calls for a decline in the Federal funds rate

to the midpoint of a 10

to 11

ranges for M-1 and M-2 of 5

percent range, and would be associated with

to 9

and 8 to 12 percent, respectively.

the current environment, an easing in policy would take the market by surprise, and the initial reaction to such a development would likely be a rather sharp drop in both short- and long-term interest rates, particularly if market participants were to interpret the easing as the cyclical turning point in interest rates.

In foreign exchange markets, the dollar would

very probably come under strong downward pressure.

The rally in bond markets

might be constrained by a buildup of the corporate bond calendar, as firms accelerated offerings, and by continuing investor concern about the outlook for inflation.

The anticipated decline in interest rates under alternative A

is likely to be associated with only a slight easing of mortgage markets, especially since short-term interest rates would not be expected to decline sufficiently to restore the differential on MMC's favoring thrift institutions. (16)

Alternative C involves an increase in the Federal funds rate

to the midpoint of an 11½ to 12¼ percent range

and would tend to exert

more restraint on the monetary aggregates over the months ahead than alternative B.

While some tightening in the System's funds rate objective

may still be built into the current level of rates, a rise in the funds rate of the dimensions contemplated by alternative C would be expected to trigger further increasesin market rates.

Such interest rate adjustments would

likely be associated with a modest strengthening of the dollar in foreign exchange markets.

Domestically, a further rise in the funds rate might

-14-

prompt thrift institutions to make vigorous efforts to reduce outstanding

mortgage commitments, which are now high relative to cash flows.

Pressures

on banks would be increased not only as their cost of funds rose but also as businesses shifted even more borrowing to short-term maturities in anticipation that a cyclical peak in rates was being approached.

-15Directive language (17)

Given below are suggested operational paragraphs for the

directive in the customary form, with alternative language related to the short-run specifications presented in the preceding section. Alternative language is also provided for placing main emphasis either on monetary aggregates or on money market conditions.

The specifications adopted last

month are shown in strike-through form. In the short run, the Committee seeks to achieve bank reserve and money market conditions that are broadly consistent with the longer-run ranges for monetary aggregates cited above, while giving due regard to developing conditions in foreign exchange and domestic financial markets.

Early in the period

before the next regular meeting, System open market operations are to be directed at attaining a (OR MAINTAINING THE) weekly average Federal funds rate (A) (B) (C)

SLIGHTLY BELOW THE CURRENT LEVEL. AT ABOUT THE CURRENT LEVEL. slightly above the current level.

Subsequently, operations shall be directed at maintaining the 10¾ to weekly average Federal funds rate within the range of [DEL: 11½] ____ TO ____

percent.

In deciding on the specific objective

for the Federal funds rate the Manager shall be guided mainly by the relationship between the latest estimates of annual rates of August-September]SEPTEMBER-OCTOBER period of Mgrowth in the [DEL: 4-to-8]____ TO and M-2 and the following ranges of tolerance: [DEL: percent for M-1 and [DEL: 7 to ____

____ TO ____ 11]

percent for M-2.

On August 30, the Committee voted to raise the upper limit of the range from 11¼ percent to 11½percent.

-16-

If rates of growth of M-1 and M-2, given approximately equal weight, appear to be Monetary aggregates emphasis SIGNIFICANTLY ABOVE OR BELOW THE MIDPOINTS Money market emphasis close to or beyond the upper or lower limits of the indicated ranges, the objective for the funds rate is to be raised or lowered in an orderly fashion within its range. If the rates of growth in the aggregates appear to be beyond the upper or lower limits of the indicated ranges at a time when the objective for the funds rate has already been moved to the corresponding limit of its range, the Manager shall promptly notify the Chairman, who will then decide whether the situation calls for supplementary instructions from the Committee.

Appendix I Implied Velocity Growth Rates Alt. A

Alt. B

Alt. C

V-1 (GNP/M-1)

1979

QI QII

12.3 ( 9.7) -1.1 (-2.4)

QIII QIV

-0.3 (-1.1) 1.2 ( 0.6)

-0.3 (-1.0) 1.1 ( 0.5)

V-2 (GNP/M-2)

1979

Note:

8.3

QII QIII

-2.0 -2.6

QIV

-1.9

-1.7

-1.5

Figures in parentheses reflect V-1 without ATS.

SEPT.

Table 1

1979

14,

Money and Credit Aggregate Measures Money Stock Measures

Bank ReservesCredit Period Tot

Nonborrowed

Monetary Base

Total Loans and Investments 4

M-1

5 PER CENI

M 1+

M-2

M-3

M-4

M-5

M-6

M-

ANNUAL tATES OF GROWTH)

ANNUALLY: 1976 1977

1978

0.6 5.3 6.6

0.8 3.0 6.7

6.7 8.3 9.1

7.5 11.1 13.5

5.8 7.9 7.2

7.6 5.5

7.6 5.6

8.8 9.0

12.5 13.6

8.0 6.1

-6.0

4.9

12.6

2.7

-0.6

6.7 2.4

9.8 7.3

13.3 12.7

9.3 0.6

-5.7

4.2

-8.2

4.7

13.2 11.9

-2.4 11.1

6.6 4.6

9.3 8.4

12.9 13.9

-2.9 -4.9

-3.3 -8.8

5.7 4.0

-5.0 8.6 5.1 -3.6 -0.1

0.2 11.3 -1.2 13.4

6.0 -21.0 1.8 -4.9 -4.9

12.6 9.3 5.4

10.9 9.8 8.4

12.7 11.7 9.3

7.1 10.1 10.4

1 0.2 1 1.7 1 0.5

9.9 11.5 10.2

9.9 11.6 11.4

7.7 8.8

8.3 9.9

10.6 9.7

10.0 10.4

10.0 9.8

11.3 10.6

5.2

6.3

4.0

5.5

6.9

9.5

7.5 -1.6

10.9 4.7

11.4 7.1

10.7 7.7

11.3 8.7

10.9 8.4

11.0 10.9

-5.2 7.2

1.7 11.3

4.6 9.2

2.5 4.4

5.0 5.1

6.2 6.8

8,6 9.1

7.9 4.1

6.1 2.7

9.8 7.6

9.9 9.3

10.4 10.2

9.7 9.7

10.2 11,1

13.6 11.2

-2.1 7.6

-5.0 3.7

1.8 8.6

4.7 7.9

4.5 3.5

6.2 4.8

7.1 6.7

9.7

9.9 16.1 14.1 15.4 8.3

7.8 13.5 1.7 -2.0 2.0

7.2

12.1 0.8 -4.3 -1.2

11.2 12.8 6.4 4.8

-4.9

5.2 13.5 8.0 5.7 7.9

11.2 13.3 8.7 6.7 5.6

9.6 12.7 5.9 12.9 4.1

10.3 13.2 8.3 11.6 6.1

9.8 14.1 7.2 10.0 7.9

2.2 -20.6 1.3 -2.9 -30.6 8.9 20.0 10.1

8.6 -0.5 4.6 4.9 3.1 6.1 11.0 12.1

18.7 13.1 7.3 14.1 8.3 13.0 13.2 10.1

-5.0 -3.7 1.3 17.7 0.7 14.8 10.1 6.8

-7,8 -6.8 -1.0 11.4 -2.1 12.3 10.0 6.5

2.9 4.8 6.2 10.5 4.9 11.9 11.3 9.6 QA

3.8 4.1 -0.4 7.7 -0.5 6.0 11.4

5.6 5.7 3.5 7.0 1.3 7.1 10.6

6.5 6.1 6.0 9.1 3.2 8.0 9.7

11.7

Q9 7

SEMI-ANNUALLY: 1ST HALF 1978 2ND HALF 1978 1ST HALF 1979 QUARTERLY: 3RD QTR. 1978 4TH QTR. 1978 IST

QTR. 1979

2ND QTR. 1979 QUARTERLY-AV: 3RD QTR. 1978 4TH QTR. 1978 1ST QTR. 1979 2ND QTR. 1979

-3.9

6.2 0.5 -4.4 -3.9

8.6 2.3

6.2 4.4

10.3 9.3

9.0

MONTHLY: 1978--AUG. SEPT. OCT. NOV. DEC. 1979--JAN. FEB. MAR. APR. MAY JUNE JULY AUG. P

-1.8 12.0 7.3

1/ BASED ON DATA ADJUSTED FOR CHANGES 2/ BASED ON QUARTERLY AVERAGE DATA. P - PRELIMINARY

IN RESERVE REQUIREMENTS.

2.9

-1.1 2.3 3.8 14.1 5.4 14.2 12.9 m n-

io9

i?9

9.7

13.9 8.5 12.7 11.2 9.0 8.4 8.2 11.4 5.5 10.2 11.9 L1.9

Table 2

SEPT. 14,

1979

Money and Credit Aggregate Measures Seasonally Adjusted, Billions of Dollars Bank Reserves Period

NonTota borrowed

Bank Credit Monetary Base

Total Loans and Invest-

Money Stock Measures

M-1

M-2

M-3

M 4

M-5

M-6

ments

37,013 38,923 41,271

36,960 38,354 40,403

120,572 130,640 142,381

808.1 895.9 1018.1

313.8 338.7 361.2

517.2 560.6 587.2

740.6 809.4 875.8

1235.6 1374.3 1500.1

803.0 883.1 972.4

1298.0 1448.0 1596.7

1436.1 1601.8 1762.6

1483.8 1658.1 1848.0

40,928 41,223

39,788 40,163

138,290 139,841

973.6 986.7

356.7 360.7

583.6 589.5

856.5 865.6

1458.0 1474.1

944.1 954.1

L545.6 1562.6

1706.4 1726.4

1778.5 1799.1

OCT. NOV. OEC.

41,399 41,274 41,271

40,122 40,570 40,403

140,777 141,450 142,381

998.3 1011.1 1018.1

361.2 360.6 361.2

589.9 587.8 587.2

870.2 873.7 875.8

1484.8 1493.1 1500.1

958.8 969.1 972.4

1573.4 1588,6 1596.7

1736.7 1751.1 1762.6

1811.8 1830.9 1844.0

1979--JAN. FEB. MAR.

41,479 40,754 40,815

40,476 39,781 39,825

143,400 143,345 143,893

1034.5 1045.8 1052.2

359.7 358.6 359.0

583.4 580.1 579.6

875.0 876.7 879.5

1503.7 1509.7 1517.5

975.5 978.8 978.5

1604.2 1611.8 1616.5

1772.1 1781.L 1790.0

1861.8 1874.8 1887.6

APR. MAY JUNE

40,647 40,481 40,421

39,730 38,716 39,004

144,48 144,862 145,601

12064.6 1072.0 1083.6

364.3 364.5 369.0

585.1 584.1 590.1

889.8 893.8 904.4

1530.8 1537.0 1552.3

984.8 984.4 989.3

1625.9 1627.6 1637.2

1803.6 1808.4 1820.5

1905.5 1914.3 1930.5

JULY AUG. P

40,824 41t072

39,653 39,987

146,936 148,421

1095.5 1104.7

372.1 374.2

595.0 598.2

914.1 922.4

1566.9 1579.5

998.7 1008.4

1651.6 1665.5

1835.2 1850.1

1949.6 1969.0

18 25

41,081 41,005

39,899 39,713

147,071 147,296

372.4 371.2

595.4 594.3

914.6 914.0

998.5 998.6

AUG.

1 8 15 22 29P

41,080 40,691 41,013 41,039 41,433

40,134 39,929 39,990 39,653 40,317

147,848 147,707 148,307 148,543 149,107

372.2 373.5 375.4 374.2 374.2

595.3 597.3 599.5 598.2 598.3

916.6 920.1 923.2 922.7 923.8

1001.9 1005.5 1008.8 1008.7 1010.4

SEPT.

SP 12P

41455 40,920

40,115 39,690

150,061 149,232

376.9

601.6

928.5

1015.2

ANNUALLY: 1976 1977 1978

MONTHLY: 1978--AUG. SEPT.

WEEKLYI

1979-JULY

NOTES.

WEEKLY DATA ARE DAILY AVERAGES FOR STATEMENT WEEKS. MONTHLY DATA ARE DAILY AVERAGES. WEEKLY DATA ARE NOT AVAILABLE FOR m M3, h, M6, NT, TOTAL LOANS AND INVESTMENTS AND THRIFT INSTITUTION DEPOSITS. 1/ BASED ON DATA ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS. DATA SHOWN IN MILLIONS OF DOLLARS. P - PRELIMINARY

SEPT.

Table 3

14, 1979

COMPONENTS OF MONEY STOCK AND RELATED MEASURES Mutual Savings Bank & & SDtCD's S&L

Time and Savings Deposits d Currency

Period

Demand Deposits

Total

OtherS'ssBa Than CD's

Total 1

Savings

Other

Other Private Short Term U.S.Gov't Short-term Securities Assets 1 1.

Credit Union Ui Shares/

Savings Bondsl Bonds

Shares-I

9.5 9.3 10.0

4.6 7.4 6.1

8.1 11.4 12.4

15.0 11.2 9.4

25.0 11.1 2.2

7.5 11.4 15.6

-23.3 12.8 32.8

15.4 14.0 10.2

17.8 19.5 15.0

6.9 6.6 5.4

7.1 12.6 8.9

12.1 13.5 46.7

9.3 10.2

7.6 4.5

12.2 12.0

7.6 10.7

2.9 1.5

11.7 18.4

42.6 19.0

8.5 11.5

17.0 12.0

6.3 4.3

12.5 4.9

50.9 33.9

1979

8.7

0.6

4.8

6.9

-6.3

17.4

-7.1

8.2

4.5

0.7

39.5

64.4

3RD QTR. 4TH QTR.

1978 1978

11.7 9.7

8.5 -2.7

11.6 11.9

12.1 7.7

4.5 -5.3

18.5 18.1

8.3 36.6

12.1 10.7

13.5 7.7

4.6 4.0

9.3 6.2

13.7 69.3

1ST QTR. 2ND QTR.

1979 1979

7.8 8.5

-6.4 12.3

5.4 0.5

4.6 11.5

-9.5 0.2

15.6 19.4

9.9 -57.0

9.5 5.9

1.5 9.8

0.0 0.0

35.2 43.1

58.1 49.9

2.9 0.2

17.9 18.2

12.2 25.0

10.9 11.8

13.7 10.1

4.6 4.0

2.5 7.3

21.0 44.4

2/ ANNUALLY: 1976 1977 1978

5 6 7 8 (Per cent annual rates of growth)

2/ SEMI-ANNUALLY: 1ST HALF 1978 2ND HALF 1978 1ST HALF QUARTERLY:

QUARTERLY-AV 3RD QTR. 4TH QTR.

1978 1978

9.6 10.6

7.3 1.7

11.3 12.3

11.0 10.2

1ST QTR. 2ND QTR.

1979 1979

9.1 8.1

-6.2 7.5

8.4 1.2

4.5 9.3

-9.6 -3.1

15.6 18.5

29.9 -41.0

9.6 6.7

0.8 8.3

1.5 0.0

28.7 46.9

67.9 52.1

9.0 16.6 7.6 10.0 11.2

7.4 12.3 -0.9 -5.9 -1.4

10.9 12.5 8.5 21.7 5.3

13.8 12.2 10.0 9.4 3.5

6.5 10.2 -0.5 -8.5 -7.0

19.9 13.9 18.5 23.7 11.2

-5.5 12.3 1.4 92.1 15.1

11.2 13.5 12.5 9.8 9.5

11.8 16.3 9.2 4.6 9.1

3.0 4.5 4.5 3.0 4.5

5.9 39.9 -11.4 -14.4 45.3

6.7 11.7 41.3 75.0 81.1

9.7 -4.5 1.5 28.1 9.6 -6.8 -1.5 19.2 8.9 16.0 0.0 55.5 5.5 6.8 0.0 56.9 3.9 4.5 0.0 38.3 8.1 17.8 0.0 29.9 7.9 24.2 0.0 1.2 6.6 (9. i,5 ., O~NH AND EN5 OF"" END OF CARENT

61.9 53.5 51.2 51.6 47.1 45.3 49.1 0t7

MONTHLY: 1978--AUG. SEPT. OCT. NOV. DEC.

1979--JAN. 8.6 -10.0 9.0 FEB. 8.6 -8.3 8.6 MAR. 6.1 -0.9 -1.4 APR. 9.7 21.3 2.1 MAY 6.0 -1.4 -1.4 JUNE 9.5 16.8 0.8 JULY 10.6 10.3 12.2 AUG., P 1.4l 3.6 4146 N 6EST1HATED 1/ G TH RA ES ARE BA E PREVIOUS MONTH REPORTED DATA. 2/ BASED ON QUARTERLY AVERAGE OATA. P - PRELIMINARY.

1.6 -11.8 12.8 6.5 -12.0 20.0 5.6 -4.9 13.6 11.8 0.0 19.8 8.7 -7.2 19.9 13.6 7.8 17.6 14.6 9.4 18.1 14.0 6.6 19.0 NiHLY AVERAE LEVELS DERIVED B

48.4 19.1 -36.4 -48.5 -55.6 -75.5 -2.8 17.0 AVERAGIN!

SEPT.

Table 4

14,

1979

COMPONENTS OF MONEY STOCK AND RELATED MEASURES -

-I

Time and Savings Deposits

Currency Demand Deposits

Period

-wc *

Total Other Than CD's Savisi-tal ToTotal Other Savings Othr Total

-I

CD's

ShortTerm U.S Govt Sec Sec y,

Mutual Savings Credit Union Savings Bank Bonds & S&L Shares Shares 11 Shares 1/ a a IA *

ii *

Other I Total NonPrivate Govt Short- Deposit funds Demand term 3/ Deposits Assets 1As 19 12

12 13

80.8 88.6 97.5

233.0 250.1 263.7

489.2 544.4 611.2

426.7 470.7 514.6

202.1 219.7 223.0

224.7 25L.0 291.5

62.4 73.7 96.6

456.1 518.3 571.2

38.9 46.6 53.1

71.9 76.6 80.6

bb.2

77.2 85.3

47.7 56.3 85.3

55.4 62.7 84.9

11.4 11,7

93.9 95.2

262.8 265.5

587.4 593.5

499.8 504.9

224.1 226.0

275.7 278.9

87.6 88.5

550.1 556.3

51.4 52.1

79.5 79.8

81.3 84.0

72.0 72.7

77.9 78.3

16.8 16.7

OCT. NOV. DEC.

95.8 96.6 97.5

265.3 264.0 263.7

597.7 608.5 611.2

509.1 513.1

225.9 224.3 223.0

283.2 288.8 291.5

88.6 95.4 96.6

562.1 566.7 571.2

52.5 52.7 53.1

80.1 80.4 80.6

83.2

82.2 85.3

75.2 79.9 85.3

85.0 82.5 84.9

21.0

514.6

1979--JAN. FEB. MAR.

98.2 98.9 99.4

261.5

259.7 259.5

615.8 620.2 619.5

515.3 518.1 520.5

220.8 218.6 217.7

294.6 299.5 302.9

100.5 102.1 99.0

575.8 580.4 584.7

52.9 52.6 53.3

80.7 80.6 80.6

87.3 88.7 92.8

89.7 93.7 97.7

83.1 95.8 100.7

14.7 10.2 9.4

APR. MAY JUNE

100.2 100.7 101.5

264.1 263.8 267.5

620.6 619.9 620.3

525.6 S529.4 535.4

217.7 216.4 217.8

307.9 313.0 317.6

95.0 90.6 84.9

587.4 589.3 593.3

53.6 53.8 54.6

80.6 80.6 80.6

97.2 100.3 102.8

101.9 105.9 109.9

104.6 111.2 115.8

8.1 9.3 13.8

JULY AUG. P

102.4 103.6

269.8 270.6

626.6 634.2

541.9

548.2

219.5 220.7

322.4 327.5

84.7 85.9

597.2 600.5

55.7 56.6

80.6 80.7

102.9 104.0

114.4 118.9

119.4 127.7

16.0 16.0

11 18 25

102.0 102.3 102.6

271.3 270,2 268.6

625.1 626.1 627.3

540.4 542.2 542.8

219.5 219.6 219.7

320.9 322.6 323.1

83.9 84.6

14.3 15.3 17.7

1 8 15 22 29P

103.0 103.3 103.5

629.7 632.0 633.4 634.6 636.3

544.4 546.6 547.9 548.5

103.9

269.3 270.2 271.9 270.4 270.3

549.6

219.7 220.5 220.8 220.7 220.8

324.7 326.1 327.1 327.8 328.8

85.3 85.4 85.5 86.1 86.7

178, 18.4 15.4 15,7 14.8

104.8

272.1

638.2

551.6

221.3

330.2

86.6

13,0

ANNUALLY: 1976 1977 1978 MONTHLY: 1978--AUG. SEPT.

15,4

20.L 15.4

WEEKLY: 1979-JULY

AUG.

SEPT.

103.8

84.7

ESTIMATED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT MONTH AND END OF PREVIOUS MONTH REPORTED DATA. INCLUDES PRIVATE DOMESTIC NDNFINANCIAL INVESTORS' HOLDINGS OF COMMERCIAL PAPER, BANKERS ACCEPTANCES, SECURITY RP'S ANO MONEY MARKET MUTUAL FUND SHARES. 3/ BORROWINGS BY BANKS FROM OTHER THAN COMMERCIAL BANKS IN THE FORM OF FEDERAL FUNDS PURCHASED, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, AND OTHER LIABILITIES FOR BORROWED MONEY. PLUS NET LIABILITIES TO RELATEP FOREIGN INSTITUTIONS, INET EURODOLLAR BORROWINGS), LOANS SOLD TO AFFILIATES, LOAN RPS, AND OTHER MINOR ITEMS. 4/ INCLUDES TREASURY DEMAND DEPOSITS AT COMMERCIAL BANKS AND FEDERAL RESERVE BANKS AND TREASURY NOTE BALANCES. P - PRELIMINARY 1/ 2/

TABLE 5 SELECTED INTEREST RATES (percent)

STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC SEPTEMBER 14, 1979

Long-Term

Short-Term

yB Federal

Funds (1) 10.25 6.58

1978--High Low

CDs New

Paper

TreuryIssue-

Market 3-mo 1-yr (2) (3) 9.62 9.30 6.55 6.16

Comm.

Auction 6-mo (4) 9.58 6.42

NYC 90-day (5) 10.65 6.65

U.S. Govt. Constant

Bank

Yields

aMaturity

Corp.-Aaa

Muni-

Utility

cipal

Homn

Mortgages Secondary Market

Recently Offered (12)

bond Buyer (13)

rmaro C" . (14)

FNMA Auc. (15)

GNMA Sec. (16)

(8)

(9)

(10)

New Issue (11)

7.75

9.59 7.40

9,22 7.72

9.00 8.01

9.30 8.61

9.54 8.48

6,67 5.58

10.38 8.98

10,60 9.13

9.68 8,43

90-119 day (6) 10.52

e (7) 11.57

6.68

11.30 9.93

10.43 8.85

9.95 8.64

10,29 8.87

11.35 9.46

11.59

12.68

9.69

9.38

9.30

9.87

9.66

11.50

8.78

8.74

8.79

9.40

9.93 9.39

6.58 6.08

11.20 10.38

10.92 10.42

10.36 9.51

8.04 8.45

7.08 7.85

7.73 8.01

7.36 7.95

7.86 8.34

7,83 8.39

9.01 9.41

8.33 8.41

8.38 8.42

8.45 8.47

8,82 8.86

8.9L 8.86

- 6.12 6.09

9.79 9.76

9.81 9.79

8,97 9.04

8.96 9.76 10.03

7.99 8.64 9.08

8,45 9.20 9.44

8.49 9.20 9.40

9.12 10.15 10.44

8.98 10,14 10.37

9.94

8.62

8.64

8.69

9.17

9.13

6.13

9.86

Nov. Dec.

10.94 11,55

9.04 9.33

8.80 9.03

8.75 8.90

9.27 9.28

9.27 9.41

6.19 6.51

10.11 10.35

10.03 10.30 10.50

9.25 9.39 9.38

1979--Jan. Feb. Mar.

10.07 10.06 10,09

9.35 9.32 9.48

9.54 9.39 9.38

9.50 9.35 9.46

10.20 9.81 9.86

10.25 9.95 9.90

11.75 11.75 11.75

9.50 9.29 9.38

9.14 9.11 9.15

8.98 9.03 9.08

9.54 9.53 9.62

9.51 9.56 9.62

6.47 6.31 6.33

10.39 10.41 10.43

10.70 10.54 10.43

9.67 9.67 9.70

Apr. May June

10.01 10,24 10.29

9.46 9.61 9.06

9,28 9.27 8.81

9.50 9.53 9.06

9.76 9.80 9.58

9.85 9.95 9.76

11.75 11.75 11.65

9,43 9.42 8.95

9.21 9.23 8.86

9.12 9.21 8.91

9.70 9.83 9.50

9.74 9.84 9.50

6.29 6.25 6.13

10.50 10.69 11.04

10.59 10.84 10.77

9.7 9.89 9.75

July Aug.

10.47 10.94

9.24 9.52

8.87 9.16

9.19 9.45

9.70 10.25

9.87 10.43

11.54 11.91

8.94 9.14

8.92 9.05

8.92 8.97

9.58 9.48

9.53 9.49

6.13 6.20

11.09 11.09

10.66 10:67

9.77 9.90

10.42 10.28 10.35 10.63

8.96 9.25 9.29 9.34

8.64 8.78 8.84 9.01

8.87 9.16 9.26 9.47

9.60 9.63 9.68 9.87

9.66 9.75 9.87 9.96

11.50 11.50 11.50 11.50

8.78 8.88 8.96 9,05

8.74 6.87 8.97 9.00

8.79 8.88 8.97 8.98

--9.57 9.63

9.41 9.50 9.58 9.59

6,08 6.11 6,15 6.19

11.13 11.08 11,08 11.08

10.75 10.67 10.80 11.04 11.16 11.02 11.30

9.16 9.37 9.47 9.54 9.67

8.94 8,91 9.08 9.22 9.36

9.30 9.32 9.48 9.50 9.65

9.89 9.91 10.15 10.48 10.83

9.98 10.04 10.24 10.53 10.76

11.71 11.75 11.75 12.00 12.07

9.01 8.98 9.06 9,20 9.40

8.99 8.95 9.00 9.09 9.23

8.96 8.92 8.95 8.97 9.04

9.52c 9.40 9.42 9.47 9.62

9.57 9.44 9.45 9.47 9.54

6.14 6,13 6.16 6.23 6.36

11.08

9.91 10.43

9.62 9.95

9.78 10.29

11,04 11.35

11.03 11.59

12.25 12.68

9.68 9.66p

9.38 9.34p

9,18 9.20p

-9.84p

9.70 9.8 7p

6.47 6.49

11.31 11.38p

10.27 10.50

9.86 9.97

--- 11.25 11.74

12.25 12.75

9.65 9.70p

* 9.40 9.36p

9.19 9.21p

1979--High Low

1978--Aug. Sept. Oct.

1979--July

4 11

18 25 Aug.

1 8 15 22

29 Sept. 5 12 19 26 Daily--Sept. 6 13

11.08 11.08 11.10

10.66 10.65 10.64 10.69

11.13

11.20 n.a.

10.92

9.69 9.69 9.78 9.80 9.88 9.82 9.88 9.90 10.03 10.14 10.36

NOTE: Weekly data for columns 1, 2, 3, 6, and 7 are statement week averages of daily data. weekly data in column 4 are average rates set in the auctions of 6-month bills that will be issued on the Thursday following the end of the statement week. Data in column 5 are 1-day Wednesday quotes. For columns 8 through 11, the weekly date is the mid-point of the calendar week over which data are averaged. Columns 12 and 13 are 1-day quotes for Friday and Thursday, respectively, following the end of the statement week. Column 14 is an average of contract interest rates on commitments for conventional first mortgages with 80 percent loan-to-value ratios made by a sample of insured savings and loan associations on the Friday following the end of the statement week. Column 15 gives FNMA auction data for Monday preceding the end of the statement week. Column 16 is a 1-day'quote for Monday preceding the end of the statement week, The FNMA auction yield is the average yield in bi-weekly auction for short-term forward commitments for government underwritten mortgages, GNMA yields are average net yields to investors on mortgage-backed securities for immediate delivery, assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the coupon rate 50 basis points below the current FHA/VA ceiling.

TABLE 6 NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES 1/ (millions of dollars, not seasonally adjusted) Treasury Coupons Net Purchases 3/ 1 - 5 5 - 10 Over 10

Treasury

Change 2/ 1

chng

-490 7,232

1,280 -468 863 4,361 870

789 579 797 3,284 3,025 2,833 4,188

87 207 320 337 472 517 1,184

167 129 196 1,070 642 553 1,063

539 500 434 1,510 1,048 758 1,526

5,444 3,152 -5,072

1,156 774 1,135

1979--Qtr. I Qtr. II

-3,750 465

426 640

134

640

--- --- -

S -

1,136 -

year

1,582 1,415 1,747 6,202 5,187 4,660 7,962

Total I

din 5/ Total

592 400 1,665 824 469 792 45

1,059 864 3,082 1,613 891 1,433 127

1,631 9,273 6,303 7,267 6,227 10,035 8,724

-1,358 -46 -154 1,272 3,607 -2,892 -1,774

7,930 4,632 -3,283

1,224 266 -2,130

700

-170

682

110

640

-42

---110

(FR)

Federal Agencies Net Purchases 4/ I- 5 5 - 10 Over 10

Net Change Outright

2,246 1,697 1,844

1978--Qtr. 11 Qtr. III Qtr. IV

1979--Mar.

Total

I year

STRICTLY CONFIDENTIAL CLASS II - FOMC SEPTEMBER 14, 1979

--399

-8821/

Net _. 1

-6/

-1,795

680 2,542

3,713

4,290

371

-258

-2

--- -371

-491

482

3,427

-1,579i-

-944 -2,353 5,840

Apr. May June

1,021 -451

-105

July Aug.

2,252

218

237

142

693

191

288

1,712

699

140

976

2,687

-1,665 -2,279

113

218

237

142

693

806

-4,853

--- --- --

--- --- --- --- 266 1,384 188

-3,554 8,063 -3,828

693

1,184 -5,466 2,721 1,346 4,368

1979--July

Aug.

4 11 18 25 1 8 15 22 29

Sept. 5 12 19 26 LEVEL--Sept. 12

266

1,384 188

-S.

--- 211 525 75

699

140

--- --

26.8

12.2

12.3

976

1,501' 75 1,001

1,001 107 -200

18.4

69.7

275

----

1.7

--- 4.4

1.4

8.2

107

-218

122.1

-5,531 -5,182

-8.1

(in billions)

1/ Change from end-of-period to end-of-period. Outright transactions in market and with foreign accounts, and redemptions (-) in bill auctions. 3/ Outright transactions in market and with foreign accounts, and short-term notes acquired in exchange for maturing bills. Excludes redemptions, maturity shifts, rollovers of maturing coupon issues, and direct Treasury borrowing from the System. 4/ Outright transactions in market and with foreign accounts only. Excludes redemptions and maturity shifts. J/ In addition to net purchases of securities, also reflects changes in System holdings of bankers' acceptances, direct Treasury borrowings from the System and redemptions (-) of agency and Treasury coupon issues. 6/ Includes changes in both RPs (+) and matched sale-purchase transactions (-). 7/ The Treasury sold $2,600 million of special certificates to the Federal Reserve on March 31, 1979 and redeemed the last of them on April 4, 1979. 8/ $640 million of 2-year notes were exchanged for a like amount of cash management bills on April 3, 1979. On April 9, 1979 the bills were exchanged for new 2-year notes.

Cite this document

APA

Federal Reserve (1979, September 17). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19790918

BibTeX

@misc{wtfs_bluebook_19790918,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1979},
  month = {Sep},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19790918},
  note = {Retrieved via When the Fed Speaks corpus}
}