Greenbook/Tealbook

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1

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Content last modified 6/05/2009.

CONFIDENTIAL (FR)

SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS

Prepared for the Federal Open Market Committee

By the Staff Board of Governors of the Federal Reserve System

August 9, 1968

SUPPLEMENTAL NOTES

The Domestic Economy Retail sales, according to the advance Commerce report, increased 3 per cent in July from a June level which had been revised up moderately.

Expansive strength in July was widespread among the

various store types, with durable goods stores up almost 5 per cent and nondurables up 2 per cent.

The largest advances were at automotive

outlets and at general merchandise stores.

Sales at furniture and

appliance outlets also expanded significantly.

The Domestic Financial Situation The following tables present the latest estimates of total loans and investments at all

commercial banks after adjustment by

recently revised seasonal factors.

The revisions reflect refinement

of last-Wednesday adjustments as well as updating of seasonal factors. Also, greater attention has been focused in this review on achieving consistent adjustments among component and total series.

Data have

been revised from 1959 to date, although the principal revisions are reflected in data for the last three years.

In general, the revised

series for recent years shows somewhat lower levels of total bank credit in April and in the August-November period with offsetting increases mainly in March, June, and December. Revised data on total bank credit and its major components will be released to the public in the F.R. Bulletin for August. for loan components will remain confidential.

Data

For July, the most significant changes are downward revisions

in the estimated increase in bank holdings of U.S. Government securities and in security loans.

Consequently, the July increase in total bank

credit was also revised downward, although, as in July 1967, it remains large primarily as a result of the recent Treasury financing.

NET CHANGE IN BANK CREDIT All Commercial Banks--Revised Series (Seasonally adjusted annual rates in per cent)

1968

H 1

Q 1

0 2

July-

11.6

6.2

6.5

5.9

23.2

U.S. Gov't. securities

11.4

2.7

0.7

4.7

53.6

Other securities

26.1

6.5

14.3

-1.3

9.5

8.3

7.1

5.9

8.2

19.0

9.8

9.5

7.4

11.4

10.6

Total loans and investments-2/

Total loans Business loans 1/ 2/

1/

1967

All July rates are preliminary estimates based on incomplete data and are subject to revision. Data are for last Wednesday of month except for June 30 and December 31; data are partly or wholly estimated except when June 30 and December 31 are call dates.

LOANS AT COMMERCIAL BANKS (Revised series, seasonally adjusted, in billions of dollars)

Period 1966--Jan.

Feb. Mar. Apr. May June

Real j Business 1Estate I Security 1 I

|

70.4 71.3 72.2 72.9

July

74.1 75.7 76.9

Aug.

77.7

Sept.

78.1 78.6

Oct. Nov. Dec. 1967--Jan. Feb. Mar. Apr. May June July

Aug. Sept. Oct. Nov.

Dec. 1968--Jan. Feb. Mar. Apr. May June July

78.8

78.6 79.6

|

|I

49.8 50.3 50.7

7.3 7.3 7.0

51.2 51.5 51.9 52.2 52.6 52.9

7.4

7.4 7.5 7.5 7.4 7.3

53.3 53.5 53.8

7.3

54.1 54.3 54.5 54.8 55.1 55.3 55.7 56.2 56.7 57.2

8.3 8.3 8.3 8.1 7.9

7.3 7.9

Agricultural 8.4 8.5 8.5 8.6 8.6 * 8.4 8.5 8.7 8.7 8.7 8.7 8.7

84.9 86.3

57.8

9.3 9.6 9.8 9.6

58.4

9.2

8.7 8.7 8.8 9.0 9.0 9.2 9.3 9.4 9.4 9.4 9.2 9.5

86.6 87.2 87.9 89.0 89.6 90.4 91.2

58.9 59.4 60.0

10.1 10.4 9.0 8.7 8.7 8.6 10.8

9.5 9.6 9.6 9.8 9.9 10.2 10.3

80.1

80.9 81.6 82.3

82.8 83.4 83.9 84.3

84.6

60.5 61.0 61.3 61.6

7.4 8.6

I Consumer I Nonbank | | 36.1 36.4 36.9 37.1 37.3 37.5 37.7 38.1 38.2 38.4 38.6 38.8

12.1 12.3 12.5 12.6 12.4 13.0 12.7 12.1 12.1 12.3 12.2 12.1

39.0 39.1 39.2 39.4 39.4 39.6 39.8 40.1 40.3 40.6 40.8 41.0

12.1 11.9 11.7 11.6 11.5 11.4 11.3 11.4 11.7 11.8 11.6 11.4

41.4 41.9 42.0 42.5 42.7 42.9 43.1

11.5 11.3 11.2 11.6 11.7 11.4 11.3

* - Beginning June 30, about $0.2 million participation certificates previously included in agricultural loans are reclassified as "other securities." Revised seasonally adjusted data beginning 1959 will be made available in NOTE: the L.4.3 "Banking and Monetary Developments" released in mid-September. p - Preliminary. e - Estimated.

LOANS AND INVESTMENTS AT COMMERCIAL BANKS (Revised series, seasonally adjusted, in billions of dollars)

Securities Period

Loans and investments I/

Loans 1/2/

U.S. Govt.

Other 2/

1966--Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec.

26 23 30 27 25 30 27 31 28 26 30 31

297.3 298.3 299.9 302.1 303.6 307.1 308.2 308.9 309.2 308.5 308.8 310.5

194.6 196.5 198.5 200.4 202.2 203.4 204.6 205.2 206.0 207.0 207.5 208.2

57.7 56.4 55.7 55.5 54.2 55.3 55.1 55.6 54.8 53.1 52.9 53.6

45.0 45.5 45.8 46.2 47.2 48.4 48.5 48.0 48.4 48.4 48.4 48.7

1967--Jan. Feb. Mar. Apr. May June July Aug.

25 22 29 26 31 30 26 30

314.3 317.7 321.5 322.9 324.7 326.2 332.5 336.6

210.2 210.8 211.9 212.9 213.4 214.1 216.5 218.0

54.1 55.8 57.3 56.3 56.4 55.9 59.4 51.3

49.9 51.1 52.4 53.7 54.9 56.2 56.5 57.3

Sept.27 Oct. 25

339.1 342.0

219.9 221.4

61.4 61.9

57.7 58.6

Nov. 29 Dec. 30

344.3 346.5

222.7 225.4

61.2 59.7

60.4 61.4

1968--Jan. 31 Feb. 28

349.5 353.6

227.1 228.9

60.0 62.1

62.4 62.7

Mar. 27

352.1

228.7

59.8

63.6

Apr. 24 p

354.4

230.9

60.0

63.4

29 p

356.4

232.1

60.7

63.5

357.3 364.2

233.4 237.1

60.5 63.2

63.4 63.9

May

June 29 p 3/ July 31 e

1/ Adjusted to exclude interbank loans. 2/ Beginning June 9, 1966, about $1.1 billion of balances accumulated for payment of personal loans were deducted as a result of a change in Federal Reserve regulations. Beginning June 30, 1966, CCC certificates of interest and Export-Import Bank portfolio fund participation certificates totaling an estimated $1 billion are included in "Other securities" rather than "Other loans." 3/ June 29, 1968 estimated. NOTE: Data are for last Wednesday of month except for June 30 and December 31; data are partly or wholly estimated except when June 30 and December 31 are call dates. For back data, see August 1968 Bulletin. p - Preliminary. e - Estimated.

Preliminary data now available suggest that seasonally adjusted July inflows moderated at both savings and loan associations (The July datum for savings banks is

and mutual savings banks.

confidential until August 15.)

At New York City mutual savings banks,

about three-fourths of net inflows were accounted for by the newlyoffered types of accounts.

/

NONBANK DEPOSITARY INTERMEDIARIES GROWTH IN SAVINGS (Seasonally adjusted annual rates,

Mutual Savings Banks

1967 - Ql Q2 Q3 Q4

in per cent)

Savings & Loan Associations

Both

9.4 11.4 9.8 5.8

9.5 11.3 9.4 6.1

9.8 11.0 8.6 6.7

1968 - Q1 Q2E/

7.5 6.6

5.7 r 5.8-

6.2 6.1 r /

1968 - May

8.9

5.9 . 7.r/ 7.6= 4.82/

6.9

June^B

6.1

Julye

5.

7.1

4.9/

p/

Preliminary r/ Revised - although still preliminary. c/ Confidential until August 15. e/ Estimate based on FHLBB sample.

A detailed report on the recent FRB-FHLBB survey of mortgage lenders is being distributed with this Supplement.

1/

Day-of-deposit to day-of-withdrawal accounts and time deposits, discussed on pages III - 7-8 of the current Greenbook.

/

-6The Treasury announced late Wednesday an 18 per cent allotment ratio on subscriptions of over $250,000 to the new issue just offered in the Treasury financing.

Total awards exceeded the size of

the issue originally announced by some $350 million, providing the Treasury with nearly $1.9 billion of new money rather than the $1.5 billion initially planned. The 18 per cent allotment ratio was higher than a number of market participants had anticipated immediately prior to the announcement.

There has been a moderate net decline of U.S. note and bond

prices since then, possible in part in response to announcement of this week's deeper net borrowed reserve figure. rates have edged a bit higher.

At the same time, bill

However, the underlying tone of the

markets still appears to remain strong. Dealers have reported a brisk amount of when-issued trading in the new 5-5/8 per cent note, at premiums generally 6-8/32 above the issue price.

On Thursday, dealers' net holdings of the new issue

totaled $807 million.

-7KEY INTEREST RATES 1967 High

High

1968 July 16

Aug. 8

5.25 (1/11)

6.38 (5/15)

6.03 (7/10)

6.08 (8/7)

5.07 (12/5)

5.92 6.13 7.19 6.11 6.13

(5/21) (5/24) (6/4) (5/17) (6/25)

5.47 5.88 6.18 5.65

4.96 5.75 5.94 5.45

6.00

5.75

5.50 (12/29) 5.70 (12/29)

6.00 (7/18) 6.20 (5/31)

6.00 6.15

5.75 5.85

5.60 (12/1) 5.88 (12/29) 6.00 (1/16) 5.55 (12/29)

6.08 (5/21) 6.25 (5/24)

5.55 6.00

(7/25)

6.25

6.25 (5/24)

5.80

5.17 5.88 5.88 5.49

5.50 (12/29) 6.00 (12/29)

6.25 (7/11) 6.40 (5/31)

6.13

5.75

6.20

5.90

5.71 (12/29)

6.03 (5/21) 6.01 (5/31) 3.90 (5/31)

5.51

5.11 5.55 2.75

6.21 (5/21) 5.77 (3/14)

5.68

5.81 (11/20)

5.34

5.46 5.18

6.25 (12/28) 6.98 (12/28)

6.29 (6/6) 7.10 (6/3)

6.26 6.97

6.06 6.82

6.55 (12/7) 6.70 (12/1)

6.83 (5/24) 6.99 (6/3)

6.56

6.49

4.45 (12/7) 4.15 (12/28)

4.71 (5/24) 4.42 (5/31)

4.36 4.18

4.07

7.72 (6/10)

7.35 (7/15)

7.32 (8/5)

Short-Term Rates

Federal funds (weekly average) 3-months Treasury bills (bid) Bankers' acceptances Euro-dollars Federal agencies Finance paper

CD's (prime NYC) Highest quoted new issue Secondary market 6-months Treasury bills (bid) Bankers' acceptances Commercial paper Federal agencies

5.63 (12/29) 6.88 (11/28)

5.30 (12/29) 5.88 (1/6)

CD's (prime NYC) Highest quoted new issue Secondary market 1-year Treasury bills (bid) Federal agencies

Prime municipals

5.95 (12/29) 4.00 (12/29)

6.25

5.88 3.30

Intermediate and Long-Term Treasury coupon issues 5-years 20-years Corporate Seasoned Aaa Baa New Issue Aaa With call protection Without call protection Municipal Bond Buyer Index Moody's Aaa Mortgage--Implicit Yield In FNMA Weekly Auction 1/

5.91 (11/13)

-

-

3.80

1/ Yield on 6-month forward commitment after allowance for commitment fee and required FNMA stock purchase. Assumes discount on 30-year loan amortized over 15 years.

International Developments The figures included in the table on the U.S. Balance of Payments (I - T - 3) for the liquidity balance have been revised as follows:

Liquidity balance, S.A. Seasonal component Balance, N.S.A.

II

1968 May

June

-195 300 105

408

280

The corresponding changes should be made in Appendix C, making the liquidity deficit before reduction by "special" transactions $1,076 million.

Corrections

Pages II - 6 and II - 7.

Correct figures for private housing

starts and for change in starts are:

1967 1967

1968

Number, millions, A.R.

1.29

Change, per cent per year

10.3

Page III - 11.

1968 Protected IV III

III

IV

I

II

1.40

1.41

1.45

1.50

1.42

1.32

1.35

8.5

66.1

11.3

13.8

-21.3

-28.2

9.1

The figure in fifth line from top should be

27,000.

In Appendix C, line 2.C.2, delete the word "Private."