bluebooks · March 30, 1987

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.

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 optimal 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.

March 27, Strictly Confidential (FR)

1987

Class I FOMC

MONETARY POLICY ALTERNATIVES

Prepared for the Federal Open Market Committee By the staff

Board of Governors of the Federal Reserve System

STRICTLY CONFIDENTIAL (FR)

March 27, 1987

CLASS I - FOMC

MONETARY POLICY ALTERNATIVES Recent Developments (1)

Growth of the monetary aggregates has slowed sharply in the

last two months.

Preliminary data indicate that over the January-March

period M2 and M3 increased at 1 and 2-1/4 percent annual rates, respectively, well below their 6 to 7 percent short-run paths.

As a result, both aggregates

in March are around the lower bounds of their annual growth ranges for 1987. The velocities of the broader aggregates are estimated to have fallen only a shade in the first quarter, based on the greenbook GNP forecast, following decreases of about 4 percent in 1986. annual rate over the latest two months.

M1 expanded at only a 2-1/2 percent However, owing to the bulge at

year-end, M1 growth on a quarterly average basis came to 13-1/4 percent in the first quarter, implying a further substantial drop in velocity--perhaps 7 percent at an annual rate compared with its 9-1/2 percent decline last year. (2)

Slow growth in the aggregates over the last two months has

been broadly based.

Some of the deceleration appears to be related to a

reversal of the bulge in deposits and bank lending associated with the surge in transactions before year-end; also, some of the moderation in deposit growth relative to last year likely reflects the completion of portfolio adjustments to the decline in rates through last summer.

However, reasons

for the extent of the recent weakness against a backdrop of moderate increases in spending and income are not entirely clear.

Weakness in demand deposits,

which have been essentially flat since mid-January, may be related in part to a falloff in the pace of mortgage prepayments.

Other checkable deposits

-2-

KEY MONETARY AGGREGATES (Seasonally adjusted annual rates of growth) January to MarchP

QIV'86 to MarchP

January

February

MarchP

11.7

-. 7

5.7

2.5

10.9

9.5

-. 3

2.6

1.1

5.3

9.1

1.3

3.0

2.2

5.6

Domestic nonfinancial debt

13.4

8.6

n.a.

12.22

Bank credit

18.4

2.0

n.a.

11.72

Nonborrowed reserves1

25.5

-1.5

-2.1

-1.8

14.4

Total reserves

21.6

-3.3

-2.7

-3.0

13.4

Monetary base

15.9

7.1

6.6

6.9

11.0

355

273

232 3

1068

1209

9003

Money and credit aggregates

Reserve measures

Memo:

(Millions of dollars)

Adjustment and seasonal

borrowing Excess reserves

p--preliminary.

n.a.--not available.

1. Includes "other extended credit" from the Federal Reserve. 2. QIV'86 through February. 3. Through maintenance period ended March 25. NOTE:

Monthly reserve measures, including excess reserves and borrowing, are calculated by prorating averages for two-week reserve maintenance periods that overlap months. Data incorporate adjustments for discontinuities associated with implementation of the Monetary Control Act and other regulatory changes to reserve requirements.

-3-

have been expanding at a sharply reduced pace as well since January, without a compensating pickup in other retail deposits.

With short-term rates some-

what above their levels of last fall and stock prices soaring while rates on some retail deposits continue to edge down, savers may be finding alternative investment outlets more attractive.

Shifts into such instruments are sug-

gested by recent increases in noncompetitive tenders for Treasury bills, which had been declining since last March, and some pickup in flows to bond and stock mutual funds in January and February.

In light of the less favorable

treatment of consumer interest expenses under tax reform, some households also may be drawing down M2 assets to repay consumer credit or to substitute for borrowing to finance large outlays, including contributions to IRAs before the tax date. (3)

With bank credit growth weak in February and March following

the run-up over year-end, issuance by banks of CDs and other managed liabilities in M3 also has moderated in recent months.

Declines in overnight RPs

and Eurodollars contributed to the weakness in M2, but were offset in their effects on M3 by increases in their term counterparts.

At thrifts, CDs

continued to drop fairly rapidly, likely reflecting slow asset growth as well as continued reliance on Federal Home Loan Bank advances. (4)

Debt expansion by domestic nonfinancial sectors has slowed

noticeably since January, bringing the growth of this aggregate from its fourth-quarter base to a little above the upper end of its long-run range. Business borrowing has fallen off as equity retirements have remained below their year-end pace and sales of new equity picked up in lagged response to rising share prices.

Encouraged by relatively low long-term rates, busi-

ness borrowing has been concentrated in bond markets, and short-term credit

-4-

contracted in February and likely in March as well.

Overall household

borrowing seems to have moderated somewhat in early 1987, but remains relatively robust; strength in mortgages relative to consumer credit appears to reflect underlying spending patterns as well as a substitution from consumer credit to mortgage borrowing under home equity lines.

The growth in Treasury

debt has been cut back substantially early this year, including a large paydown of Treasury bills; the Treasury has met a substantial portion of its needs by drawing on its sizable year-end cash balance. (5)

Total and nonborrowed reserves fell slightly over February

and March, as required reserves leveled off following the year-end bulge in transactions deposits and excess reserves edged lower in line with their usual seasonal pattern.

In the three complete reserve maintenance periods

since the February FOMC meeting adjustment plus seasonal borrowing has averaged $280 million, close to the $300 million level assumed in the reserve paths.

The federal funds rate associated with borrowing around this level

edged off from nearly 6-1/4 percent at the last Committee meeting to around 6 percent or a bit higher following clarification at the Humphrey-Hawkins testimony that the System had not altered its basic stance toward reserve provision. (6)

Other interest rates were little

changed on balance since the

February FOMC meeting in exceptionally quiet trading.

In addition to reduced

concerns about a monetary tightening, incoming data were seen as presenting a mixed picture for the economy, although concerns about the dollar have tended to limit the scope for any decline in rates.

On balance, private short-term

rates are generally unchanged, while Treasury bill rates have declined about 15 to 20 basis points.

This differential behavior may have reflected some

-5-

heightened concerns about credit quality related in part to Brazil's suspension of debt servicing as well as the paydown of bills by the Treasury. In contrast-to the quiet debt markets, equity prices rose 8 percent over the period, bringing their gains since year-end to around 25 percent. (7)

The dollar traded in a narrow range through most of the inter-

meeting period, with its stability reinforced by the perception that at their meeting in Paris on February 21-22 major industrial countries agreed to support the prevailing structure of exchange rates.

However, in recent

days the dollar has come under substantial selling pressure against the yen, apparently triggered by renewed trade frictions between the United States and Japan and by official statements that raised some questions about the U.S. ccmmitment to the Paris agreement.

As the dollar dropped below the 150 yen/

dollar level, the United States by purchasing nearly $1-1/2 billion against yen, of which roughly half was done for Federal Reserve account; .

Nonetheless, the

dollar has fallen about 4-1/4 percent against the yen since the last FOMC meeting.

Throughout the intermeeting period sterling has been strengthening

appreciably against the dollar and other currencies on brighter fiscal news and improved electoral prospects for the Thatcher government.

-6-

Policy alternatives (8)

The table below gives three alternative specifications for

growth in the monetary aggregates from March to June, along with associated federal funds rate ranges.

(More detailed data, including growth rates im-

plied by each alternative from the fourth quarter to June, can be found in the table and charts on the following pages.)

Expansion in the monetary

aggregates under all three alternatives is expected to pick up from the sluggish pace of February and March; even so, growth is projected to be relatively moderate, and by June the broader aggregates would still be well below the midpoints of their ranges under alternatives A and B and at or a bit below the lower bounds under alternative C. Alt. A

Alt. B

Alt. C

6-1/2

5-1/2

10-1/2

7-1/2

3 to 7

4 to 8

5 to 9

Growth from March to June

Associated federal funds rate range (9)

Alternative B assumes maintenance of the current degree of

pressure on reserve positions, with reserve paths allowing for $300 million of borrowing at the discount window.

Federal funds would be expected to

trade around 6 percent or a touch above.

The Treasury bill rate is expected

to remain around current levels or perhaps move lower in response to a further reduction in supply; although the Treasury is likely to sell cash management bills in coming days, they would mature shortly after the April tax date, and net redemptions of bills at regular weekly auctions are expected

Alternative Levels and Growth Rates for Key Monetary Aggregates M2

Alt. A

Alt. B

Alt. C

Alt. A

Alt. B

Alt. C

Alt. A

Alt. B

Alt. C

Levels in billions 1987-January February March

2822.0 2821.3 2827.3

3515.8 3519.5 3528.4

737.6 737.2 740.7

April May June

2841.9 2858.0 2876.6

2841.0 2855.0 2869.6

2840.1 2852.0 2862.6

3546.6 3565.2 3585.2

3545.7 3562.8 3580.8

3544.9 3560.6 3576.4

747.3 753.5 760.3

746.9 752.4 757.6

746.5 751.3 754.8

Monthly Growth Rates 1987-January February March

9.5 -0.3 2.6

9.1 1.3 3.0

11.7 -0.7 5.7

April May June

6.2 6.8 7.8

5.8 5.9 6.1

5.4 5.0 4.5

6.2 6.3 6.7

5.9 5.8 6.1

5.6 5.3 5.3

10.7 10.0 10.8

10.0 8.8 8.3

9.4 7.7 5.6

9.4 10.6 9.2 6.5 4.5

9.4 10.6 9.2 6.5 4.0

8.7 9.6 8.0 6.7 5.1

8.7 9.6 8.0 6.7 4.8

8.7 9.6 8.0 6.7 4.5

15.5 16.5 17.0 13.3 8.2

15.5 16.5 17.0 13.3 7.5

15.5 16.5 17.0 13.3 6.7

1.1 7.0

1.1 6.0

1.1 5.0

2.2 6.4

2.2 5.9

2.2 5.4

2.5 10.6

2.5 9.1

2.5 7.6

8.9 5.8 5.3 6.0

8.9 5.5 5.3 5.6

8.9 5.3 5.3 5.2

8.8 5.9 5.6 6.0

8.8 5.8 5.6 5.8

8.8 5.6 5.6 5.6

15.3 10.9 10.9 10.9

15.3 10.5 10.9 10.3

15.3 10.1 10.9 9.6

Quarterly Ave. Growth Rates 9.4 1986-Q2 Q3 10.6 9.2 Q4 6.5 1987-Q1 5.0 Q2 Jan. 87 to Mar. 87 Mar. 87 to June 87 Q4 Q4 Q4 Q4

85 86 86 86

to to to to

Q4 86 Q2 87 Mar. 87 June 87

1987 Ranges:

5.5 to 8.5

CHART 1

ACTUAL AND TARGETED M2 Bi ll Ions of dol Irs

3050

ACTUAL LEVEL -ESTIMATED LEVEL SSHORT RUN ALTERNATIVES 8.5

-- 3000

2950 °

&5z

o-*

-- 2900

• • •° •

° B

-- 2850

2800

-42750

N 1986

1987

2700

CHART 2

ACTUAL AND TARGETED M3 81 II lons or dol fars

- 3850

3800

----

ACTUAL LEVEL ESTIMATED LEVEL SHORT RUN ALTERNATIVES

s.S

-4 3750

3700

&5Z

3650

-4 3600

3550

3500

3450

- 3400 IlI O N 1986

I D

J J 1987

3350

CHART 3

M1 81 I lone or dol Iar

840 .'*-830 -^

820

- ACTUAL LEVEL *

-ESTIMATED

LEVEL

..'

SHORT RUN ALTERNATIVES'

...

-- 810

GROWTH FROM FOURTH QUARTER

800 790

..- "101

•

780

750

f..-" -

750

.. '

NaS

.' ...-

"""

S690 -

740 730

720

710

700

690

.:;...-"

N 1986

1987

700

680

Chart 4

DEBT Bil IIons or dol are

8600 -

8500 -8400

ACTUAL LEVEL

S-

8300 S 8200

S-

8100

8000 7900 7800 7700 7600 7500 7400 7300 I I I 1 I I I I I I I 1l 1 . S 0 N M A M J J A SN D J F 1987 1986 .

7200

-8-

to continue for a time.

Little net movement in long-term rates is antici-

pated under this alternative, consistent with staff expectations of moderate economic expansion and limited inflationary pressures.

The dollar might

remain under some downward pressure, but the decline in exchange rates through the spring is expected to be moderate assuming continuing efforts to stabilize rates under the Paris agreement.

Sustained weakness in the

dollar could tend to push up interest rates in U.S. markets owing to concerns about monetary policy responses and the strength of overall demand for dollar assets. (10)

Under alternative B, growth in M2 would be expected to

strengthen to a 6 percent annual rate over the March-to-June period, lifting this aggregate to the lower end of its long-run range.

With market interest

rates little changed for some time now, and not anticipated to move far from current levels under this alternative, M2 might grow about in line with income over coming months.

Shifts into non-M2 savings vehicles may

diminish, especially should stock prices show less strength, and any use of M2 balances to pay down existing consumer loans in the wake of tax reform might abate if those with a significant tax incentive have moved relatively promptly.

The deadline for 1986 IRA contributions is in mid-April, but

with the tax law changes it growth.

difficult to predict the effects on M2

On a quarterly average basis, M2 would rise at only a 4-1/2 percent

annual rate in the second quarter, given the pattern of growth over the first quarter, and the staff's GNP forecast would imply a small rise in M2 velocity, the first increase in more than a year. (11)

M3 growth under alternative B also would be expected to

strengthen to a 6 percent rate over the March-to-June period.

Inflows to

M2 deposits at banks are expected to be augmented by some pickup in the

-9-

issuance of managed liabilities included in M3; borrowing from foreign branches should drop back from recently elevated levels, and overall needs for funds are projected to increase reflecting in part a turnaround in business loans now that much of the year-end bulge has been worked off.

The pace of CD runoffs at thrifts is expected to moderate as their asset growth rebounds a bit from the recent depressed pace, though any intensification of concerns about the health of these institutions or their insurance fund could work in the other direction.

On a quarterly average

basis, M3 would grow at only a 4-3/4 percent rate, the slowest pace in more than a decade and a half; M3 velocity, which has trended downward, would post a small increase. (12)

Under alternative B, expansion of M1 is anticipated to

strengthen to a 9 percent annual rate over March to June.

The acceleration

in M1 would reflect a resumption of growth in demand deposits, which are anticipated to increase at a rate only a little below the projected growth of spending.

OCDs are expected to grow at around the reduced pace of

February and March; however, with opportunity costs widening only a little further with the continued downward drift of offering rates, the pace of growth would still considerably exceed that of income.

On a quarterly

average basis, M1 would rise at a 7-1/2 percent rate in the second quarter, the slowest rate since late 1984, and its velocity would decline at only a 2 percent annual rate.

Over the first half of the year M1 would increase

at about a 10 percent annual rate. (13)

Debt of domestic nonfinancial sectors is expected to con-

tinue to run much below the pace of last year, though remaining well in excess of the expansion of income.

Debt is projected to increase at a 9

percent rate from March to June, moving the debt aggregate down to within

-10-

the upper portion of its 8 to 11 percent range.

Borrowing by private

sectors should be around the reduced pace of the first three months of the year and of roughly the same composition.

With interest rates re-

maining around current levels and the yield curve relatively flat, business borrowing is expected to remain concentrated in long-term markets.

Gross

equity issuance might be close to its advanced March pace, while share retirements, though substantial, likely will remain below the average rate of 1986.

Similarly, household borrowing is likely to continue to be con-

centrated in mortgage markets, reflecting strong single-family housing activity and further substitution of home equity loans for consumer credit. On a seasonally adjusted basis, federal borrowing will rebound from its recent reduced pace, though in part this would serve to boost the Treasury's cash balance over the quarter. (14)

Alternative A assumes a reduction in discount window borrow-

ing to a near-frictional $150 million or a 50 basis point decrease in the discount rate with borrowing maintained at $300 million.

In either case,

the federal funds rate would decline to close to 5-1/2 percent.

This easing

in money market conditions would be expected to bolster the expansion of the aggregates, increasing the odds that M2 and M3 will be in the long-term ranges at midyear, even if economic growth turns out to be somewhat weaker than the staff projects.

Without such unanticipated economic weakness, M2

growth would be expected to strengthen to a 7 percent annual rate over the March-to-June period, and M3 to 6-1/2 percent, lifting both noticeably above the lower boundaries of their long-run ranges by June.

Flows into retail

accounts would strengthen again, boosted by lagging offering rates on these accounts, especially OCDs and passbook savings. appreciably over the coming months.

M1 likely would accelerate

-11-

(15)

There appears to be little expectation of an easing action

in the period just ahead and thus the three-month bill rate also would decline by about 1/2 of a percentage point, toward 5 percent.

Other short-

term rates could fall a little more, tending to reverse the recent widening in spreads, to the degree that lower interest rates were viewed as enhancing the financial condition of troubled borrowers and intermediaries.

Unless

this alternative were undertaken in the context of a generally weaker than expected world economy accompanied by substantial monetary easing abroad, downward pressure on the dollar likely would intensify, perhaps requiring substantial additional official intervention if authorities attempted to maintain exchange rates around recent levels.

Absent indicators pointing

to a much weaker economy, the pressure on the dollar and perhaps more concern about inflation might limit the extent of any decline in long-term rates. (16)

Under alternative C, reserve paths would be drawn with a

borrowing level of $500 million, which would push the federal funds rate up to the 6-1/2 percent area.

The three-month bill rate would rise about 50

basis points under this alternative and CD rates possibly by more.

The

increase in interest rates would tend to relieve downward pressure on the dollar, at least for a while.

Bond rates would rise, as there appears

to be little expectation in the markets of a tightening, although any such increase would be limited by sentiment that such a move was acting to contain inflationary pressures, in part through its effect on the dollar. (17)

A rise in interest rates would limit the extent of the pick-

up in M2--as opportunity costs of holding M2 balances widened.

Given the

weakness of this aggregate in the first quarter, which may have reflected shifts in portfolio preferences, alternative C would tend to bring M2

-12farther below the lower end of its long-run range over the second quarter. Slower expansion of assets at banks and thrifts would act to restrain M3 growth to along the lower end of its long-run range.

Growth in its M1

component would be expected to remain subdued but still be above that of income.

-13-

Directive language (18)

Draft language for the operational paragraph, with the

usual alternatives for indicating the degree of reserve pressure, is shown below.

The draft provides for the specification of numerical growth rates

for M2 and M3 but, as in earlier directives, not for M1.

Should the Commit-

tee wish to place particular emphasis on exchange market conditions in the implementation of policy over coming weeks, language along the lines shown in the first bracket might be used (with corresponding deletions to the present language on foreign exchange market developments also shown in brackets). An alternative would be to move up the reference to exchange market developments in the existing sentence on possible intermeeting adjustments.

With

regard to such adjustments, the draft provides for numerous options with appropriate usage of "would," "might," "somewhat," and "slightly." OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to DECREASE SOMEWHAT (Alt. A)/maintain (Alt. B)/ INCREASE SOMEWHAT (Alt. C) the existing degree of pressure on reserve positions.

This action is expected to be consistent with

January]through growth in M2 and M3 over the period from MARCH[DEL: [DEL: March] JUNE at annual rates of ____ AND ____ [DEL: about 6 to 7]percent,

RESPECTIVELY.

slow] substantially Growth in M1 is expected to REMAIN [DEL:

BELOW ITS PACE IN 1986 [DEL: from the high rate

of earlier months.] [IN

LIGHT OF THE RECENT INSTABILITY OF THE DOLLAR IN FOREIGN EXCHANGE

MARKETS, PARTICULAR EMPHASIS WILL BE PLACED ON CONDITIONS IN THESE MARKETS IN OPERATIONAL DECISIONS.

IN ADDITION, ] somewhat (SLIGHTLY)

greater reserve restraint would (MIGHT),

or slightly (SOMEWHAT)

lesser

-14-

reserve restraint might (WOULD),

be acceptable depending on the

behavior of the aggregates, taking into account the strength of the business expansion, [developments in foreign exchange markets,] progress against inflation, and conditions in domestic and international credit markets.

The Chairman may call for Committee

consultation if it appears to the Manager for Domestic Operations that reserve conditions during the period before the next meeting are likely to be associated with a federal funds rate persistently [DEL: percent. outside a range of ____TO ____4-to-8]

Selected Interest Rates March 30, SShort-tem od P0 fedal un

Siont | 1

secons d mrt n""k

ntIy3

3Smonth 4

nk pK prime

oney

bms Truy MWOmy

-nh 8

6 mutual i fund T

U.8. government constant maturity yields

Long-Term municipal orort A utility recenl BBond e

3-year

10year

30-yer

offered

conventnal home mortgage primary mrket

mtlirket fixed- ate

fixed-rate

ARM

1986--itgh Low

9.55 5.75

7.21 5.09

7.30 3.16

7.35 5.32

7.94 5.47

7.91 5.60

7.21 5.17

9.50 7.50

8.60 6.24

9.38 7.02

9.52 7.16

10.83 9.03

8.72 7.15

10.97 9.31

10.99 9.30

1987--High Low

7.62 5.95

5.73 5.33

5.73 5.36

5.71 5.40

6.23 5.83

6.26 5.88

6.19 5.28

7.50 7.50

6.62 6.37

7.31 7.03

7.60 7.34

8.92 8.79

7.09 6.92

9.26 8.97

9.32 9.07

Monthly 19 .- lar. Apr. May June July Aug. Sep. Oct. Nov. Dec. 1987--Jan. Feb.

7.48 6.99 6.85 6.92 6.56 6.17 5.89 5.85 6.04 6.91 6.43 6.10

6.56 6.06 6.15 6.21 5.83 5.53 5.21 5.18 5.35 5.53 5.43 5.59

6.57 6.08 6.19 6.27 5.86 5.55 5.35 5.26 5.41 5.55 5.44 5.59

6.59 6.06 6.25 6.32 5.90 5.60 5.45 5.41 5.48 5.55 5.46 5.63

7.24 6.60 6.65 6.73 6.37 5.92 5.71 5.69 5.76 6.04 5.87 6.10

7.30 6.75 6.72 6.79 6.42 6.02 5.74 5.74 5.84 6.63 5.95 6.12

7.00 6.60 6.22 6.18 6.02 5.74 5.34 5.22 5.21 5.45 5.50 5.32p

9.10 8.83 8.50 8.50 8.16 7.90 7.50 7.50 7.50 7.50 7.50 7.50

7.30 6.86 7.27 7.41 6.86 6.49 6.62 6.56 6.46 6.43 6.41 6.56

7.78 7.30 7.71 7.80 7.30 7.17 7.45 7.43 7.25 7.11 7.08 7.25

7.96 7.39 7.52 7.57 7.27 7.33 7.62 7.70 7.52 7.37 7.39 7.54

9.41 9.26 9.50 9,65 9.57 9.51 9.56 9.48 9.31 9.08 8.92 8.82

7.74 7.61 7.92 8.30 7.95 7.59 7.53 7.47 7.23 7.23 6.99 7.03

9.86 9.72 10.11 10.45 10.18 9.82 9.98 9.82 9.56 9.34 9.15 9.04

10.08 9.94 10.14 10.68 10.51 10.20 10.01 9.97 9.70 9.31 9.23 9.12

3 10 17 24 31

6.25 5.97 6.30 6.31 9.20

5.41 5.46 5.54 5.55 5.65

5.44 5.47 5.55 5.59 5.65

5.47 5.48 5.55 5.59 5.65

5.83 5.86 5.99 6.24 6.27

5.99 6.02 6.27 7.20 7.56

5.22 5.26 5.25 5.39 5.48

7.50 7.50 7.50 7.50 7.50

6.38 6.36 6.43 6.45 6.54

7.12 7.07 7.13 7.09 7.18

7.37 7.33 7.39 7.36 7.43

9.08 9.03 9.08 9.07 9.14

7.15 7.34 7.31 7.16 7.19

9.37 9.38 9.31 9.31 9.39

9.30 9.35 9.30 9.30 9.37

7 14 21 28

7.62 6.01 6.01 6.13

5.51 5.38 5.33 5.45

5.53 5.43 5.36 5.40

5.52 5.46 5.40 5.44

5.96 5.85 5.83 5.85

6.14 5.89 5.88 5.90

6.19 5.46 5.42 5.34

7.50 7.50 7.50 7.50

6.42 6.38 6.37 6.42

7.10 7.06 7.03 7.11

7.37 7.34 7.35 7.44

8.92 8.88 8.84 .81

7.01 7.04 6.92 6.98

9.26 9.12 8.97 9.03

9.32 9.25 9.10 9.12

Feb.

4 11 18 25

6.22 6.14 6.21 5.95

5.58 5.73 5.67 5.44

5.57 5.73 5.69 5.43

5.57 5.67 5.71 5.56

5.94 6.05 6.23 6.12

6.00 6.11 6.26 6.09

5.31 5.28 5.34 5.36

7.50 7.50 7.50 7.50

6.51 6.60 6.62 6.52

7.20 7.27 7.31 7.22

7.50 7.54 7.60 7.52

8.80 8.88 8.80r 8.79

6.98 7.09 7.05 7.01

9.02 9.09 9.04 9.02

9.11 9.12 9.14 9.10

Ner.

4 11 18 25

6.06 6.12 6.08 6.14

5.49 5.63 5.61 5.56

5.48 5.63 5.59 5.57

.58 5.69 5.67 5.66

6.10 6.13 6.16 6.19

.6.11 6.16 6.21 6.25

5.34 5.35 5.39 5.39

7.50 7.50 7.50 7.50

6.51 6.56 6.54 6.58

7.18 7.22 7.21 7.24

7.48 7.51 7.51 7.55

8.80 .83 8.86 8.91

6.92 7.02 7.08 7.11

9.07 9.01 8.98 8.99

9.08 9.09 9.08 9.07

6.09 6.21 6.15p

5.52 5.57 5,63

5.55 5.60 5.56

5.63 5.70 5.77

6.16 6.22 6.22

6.21 6.31 6.31

7.50 7.50 7.50

6.53 6.61 6.68p

7.22 7.24 7 32 . p

7.53 7.56 7.66p

eekly 1986-Dac.

1987-Jan.

Daily 1987-Mar. 20 26 27

S --

NOTE: Wekly data for columns 1 through t are tateomentweek averges. Data n column 7 are taken hrom Oonoghue's Mony Fund Report. Columns 12 and 13 re 1-day quotes for Friday and Thursday, reagpclively. following te end of the statement week. Column 13 Isthe Bond Buyer revnue Index. Column 14 s the FNMA purchase yield, plu loan srlcing fee, on 30day mandatory delivery commitments on the Friday following the end of the statement wek. Column 16 is the average contract rate on new commitments for fixed-rate mort.

1987

gages (FRMs) with 80 percent loan-to-value ratios t a sample of savings and loans. Column 16 Is the average Initial contract rate on new commitments for one-year. adluatble-ratr mortgaas (ARMsl at SALs offering both FRMs and ARMs with the same number of discount points. FR 1367 (1285)

Strictly Confidential (FR)Class II FOMC

Money and Credit Aggregate Measures Seasonally adjusted MAR. Money stock measures and liquid assets nontranactions MPtod M2 componentl

M1 S1

in M2 3

In M3 only

U.S. government

Investments 7

__ S

30,

1987

Domestic nonfinancial debts

Bank credit total loans and

other 2 9

totall 10

FPSCSlT ASIUAL GBOgtBh (W11 TO Qf1)

IANUALLI 1984 1985 1986

5.4 12.1 15.3

7.9 8.8 8.9

8.6 7.8 6.9

23.3 3.4 8.3

10.7 7.7 8.8

12.2 8.5 8.1

11.2 9.9 9.4

16.0 15.2 14.6

13.4 12.9 12.7

13.9 13.5 13.1

QUARTULI AVEnAGI

28D gQT. 1986

15.5

9.4

7.4

5.9

8.7

7.1'

4.1

11.6

9.8

10.2

32D gTI. 4TH UTS. iST 9T1.

16.5 17.0 13%

10.6 9.2 6

8.6 6.6 4

5.8 3.4 7

9.6 8.0 6

8.0 8.3

10.5 9.1

14.5 12.3

11.7 12.1

12.3 12.1

15.8 1.44 21.1 16.4 16.4 18.4

7.7 11.5 10.7 9.2 11.0 11.0

5.0 10.6 7.3 7.4 10.3 8.4

9.3 6.9 -3.2 5.9 7.0 5.3

8.0 10.6 7.9 8.5 10.8 9.9

4.5 7.7 9.8 6.3 8.0 8.5

5.7 2.0 5.9 3.0 13.2 13.8

5.6 9.6 17.3 19.3 14.7 8.8

6.4 10.7 10.8 9.9 10.4 14.7

7.8 10.4 12.3 12.1 11.4 13.3

SErt. OCT.

801.

10.7 14.4 18.8

7.9 10.7 6.4

7.0 9.5 2.2

11.9 -6.8 6.3

8.7 7.2 6.4

8.6 7.7 7.8

13.0 2.2 8.9

11.5 9.6 15.2

13.0 10.0 11.4

12.6 9.9 12.3

DIC.

30.5

10.6

3.7

9.1

10.3

9.6

17.4

18.9

14.3

15.4

11.7 -0.7 6

9.5 -0.3 3

8.8 -0.2 1

7.8 7.4 5

9.1 1.3 3

9.3

18.4 2.2

8.0 4.3

14.9 10.0

13.3 8.7

BOUT.LI LTZLS (SBILLIOSS) 1986--oCT.

701.6

2760.7

2059.3

680.5

3441.2

4081.8

2034.0

1755.5

5698.2

7453.7

NOT. DEC. 1987--JAS. FBB.

712.4 730.5 737.6 737.2

2775.4 2799.6 28412.0 2821.3

2063.0 2069.3 d084.4 208 .1

684.1 669.3 693.8 698.1

3459.5 3489.2 3515.8 3519.5

4108.2 4141.1 4173.1

2049.0 2078.7

1777.7 1805.7 1817.8 1824.3

5752.4 5821.0 5893.4 5942.6

7530.0 7626.6 7711.1 7766.9

1986 1986 1987 PB

HONTILI 1986-8An. APL NA! JUiE JOLL AUG.

1967-JAL. 18B. UAL. P1

OnEKLI LSBV.S

1987-t8.

2 9 16 23

MAR.

4110.6 2114.5

(SBILLIONS)

737.0 734.8 736.9 730.8 738.3

9 F 16 1

739.0 740.2

UAOUAL RATES 0OR8UE CERDIT AM 3341110 SUTBAER26, 1984.

DI 8 DATA ASS ON A BOITLI AVIAGE TO BO0011 DISCONIIZOiTIs. P-PRNLIBINIBI

PS-PRILIIINARI

ESTIIATE

ADJUSTED

BASIS,

FO0 A TRANMSFE

LOANS nBon COITI ENT AL ILLI OIS UAONAI.

DBaIVSD Bt A1XRtAII8G

DAK TO THE FDIC

BD-OFr-OONB L8ELS OF ADJACICT NOBTUS,

AgOD

&AVE BsEEN 1DSTSD

Components of Money Stock and Related Measures Billions of dollars, seasonally adjusted unless otherwise noted MAR.

Period

Currency

Other Overnight MMDA Demand checkable RPs and NSA deposits deposits Eurodollars NSA

Savings deposits

Small denomination time deposits'

Money market mutual funds, NSA general Instilupurpose, lions nd broker/ only dealer' 8 9

30,

1987

Large denomnation time 3 deposits

Term RPs NSA

Term Eurodollars NSA

Savings bonds

Shortterm CommerTreasury clal paper securities

Bankers acceptances

56.1 67.3 77.1

405.4 509.2 568.1

290.5 301.9 358.4

880.0 880.3 858.4

161.7 176.6 207.2

57.7 64.7 84.3

413.6 433.3 446.2

65.6 63.0 81.0

81.7 77.6 79.4

73.9 78.9 89.7

267.3 295.2 290.6

161.2 201.7 229.0

45.7 43.2 37.7

183.1 186.0

68.4 67.3

517.1 521.0

304.8 306.6

889.8 892.0

181.0 186.2

67.7 70.2

447.6 448.5

70.7 71.7

79.1 82.7

80.5 81.2

305.7 299.1

208.6 208.8

42.5 41.4

277.7 282.2 285.0

189.9 195.5 199.6

68.2 68.9 66.3

526.1 531.6 541.0

311.1 316.8 321.8

893.1 888.0 883.0

191.4 193.2 197.3

74.1 76.1 75.0

451.3 447.6 447.5

71.6 74.1 75.1

81.4 79.7 80.0

81.9 82.7 83.5

298.3 303.8 298.2

206.1 210.7 212.6

40.6 39.8 39.8

177.6 179.0 179.7

288.2 291.2 292.2

204.5 210.4 214.7

71.9 74.7 72.7

546.6 553.6 558.8

327.4 334.6 341.4

880.9 876.7 872.2

199.7 200.5 202.2

77.5 80.8 84.4

448.3 449.4 448.5

74.7 75.4 78.1

78.2 77.2 79.9

84.3 85.3 86.4

292.5 288.7 288.0

214.5 219.7 223.9

39.0 37.3 36.9

OCT. MOV. DBC.

181.2 182.4 183.5

293.4 297.8 308.3

220.4 225.9 232.3

77.4 76.7 77.3

564.4 568.7 571.3

350.4 358.5 366.2

864.7 857.1 853.3

206.9 207.1 207.6

84.5 84.4 84.1

445.7 445.9 447.0

78.2 82.6 82.2

76.6 78.4 83.2

87.7 89.8 91.7

286.9 292.4 292.4

228.4 228.4 230.2

37.7 38.0 37.5

1987-JA1. F88.

186.0 187.2

305. 300.7

240.0 242.7

83.7 79.8

574.2 570.6

376.7 387.3

851.3 847.2

209.0 210.8

84.0 84.7

4419.6 447.8

80.9 83.5

86.4 90.5

92.7

287.2

239.7

37.7

157.8 169.7 182.4

246.6 268.6 299.8

143.9 175.9 226.2

1986-18B. BAI.

172.7 173.8

270.3 274.6

AP0. BA1 JU0I

174.4 175.8 176.7

JOLt AUG. SEPT.

AUOALLI (4T78 Ut): 1984 1985 1986 801TNLI MONTHLY

1/ 2/ 3/

INCLUDS RETAIL REPURCHASB AGRIBBENTS. ALL IRA AND KEOGH ACCOUNTS AT CUONERCIAL BANKS AND THRIFT INSTITUTIONS ARE SUBTIACTED FROM SMALL TIME DEPOSITS. bXCLOUDS IRA AND KEOGH ACCOUNTS. NET OF LARGE DENONINATIUJ TINE DEPOSITS HELD ut HONE r HMABKET MUTUAL FUNDS AND THRIFT INSTITUTIONS.

STRICTLY CONFIDENTIAL (FR)

CLASS II-FOMC

Net Changes in System Holdings of Securities 1 Millions of dollars, not seasonally adjusted

March 30, Tresury bills

Period

Treasury coupons net purchases'

-Ih-

-5 _______1_____

1980 1981 1982 1983 1984 1985 1986

-3.052 5.337 5,698 13,068 3,779 14,596 19,099

1986--qTR.

I 11 III

IV 1986-July Aug. Sept.

-2,821 7,585 4,668 9,668

928 3,318 5,422

1987--Jan. Feb.

414 -4,189

Jan.

over 10

2,138 1,702 1,794 1,896 1,938 2,185 893

190

total

outright hodings over 10

1 5-5-10

total

2,035 8,491 8,312 16,342 6,964 18,619 20,178

2,462 684 1,461 -5,445 1,450 3,001 10,033

1,476

-2,861 7,535 4,577 10,927

-3,580 -356 4,044 9,925

867 2,850 861

-1,270 -448 5,762

835 4,670 5,422

-3,493 1,852 11,566

304 -4,441

-10,701 -4,723

461 4,123 115 497 461

1,702 -2,061 3,050 -743 12,379 -10,570 1,458 -874 495

190

-252

3 10 17 24 31

461 4,123 115 497 461

7 14 21 28

467 530

467 420

.....

Net RPs

total'

4,564 2,768 2,803 3,653 3,440 4,185 1,476

867 2,940 861

Oct. Nov. Dec.

Dec.

912 294 312 484 826 1,349 190

5-10

Net change

Federal agencies net purchases'

-1-,n

1987

- -

Feb.

4 11 18 25

-704 -3,538 -629

-707 -3,788 -629

-6,611 92 1,802 -5,252

Mar.

4 11

305 200 153 168

4,110 5.155 -5,445 -145

206.8

-4.6

18 25 LEVEL--Mar. 25 ($ billions)

100.9

15.7

1. Change from end-of-period to end-of-period. 2. 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.

3.9

1.3

7.7

5. In addition to the net purchase of securities, also reflects changes In System holdings of bankers' acceptances, direct Treasury borrowing from the System and redemptions (-) of agency and Treasury coupon issues. 6. Includes changes in RPs (+), matched sale-purchase transactions I-), and matched purchase sale transactions (+

Cite this document

APA

Federal Reserve (1987, March 30). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19870331

BibTeX

@misc{wtfs_bluebook_19870331,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1987},
  month = {Mar},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19870331},
  note = {Retrieved via When the Fed Speaks corpus}
}