Greenbook/Tealbook

Prefatory Note The attached document represents the most complete and accurate version available based on original files from the FOMC Secretariat at the Board of Governors of the Federal Reserve System. 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.

Content last modified 02/09/2012.

Confidential (FR) Class III FOMC

October 20, 2006

CURRENT ECONOMIC AND FINANCIAL CONDITIONS Supplemental Notes

Prepared for the Federal Open Market Committee by the staff of the Board of Governors of the Federal Reserve System

Contents

The Domestic Financial Economy ...........................................................1

Table Commercial Bank Credit .................................................................1 Selected Financial Market Quotations .............................................2

The Domestic Financial Economy

Commercial Bank Credit (Percent change, annual rate, except as noted; seasonally adjusted) Type of credit

Total2

Level,1 Sept. 2006

2004

2005

H1 2006

Q3 2006

Aug. 2006

Sept. 2006

8.9

10.5

11.9

8.5

5.7

2.4

7,791

Loans3 Total To businesses Commercial and industrial Commercial real estate

9.7

11.6

11.6

10.2

8.7

5.2

5,801

1.2 11.7

13.2 17.1

16.3 15.6

19.0 12.9

29.3 8.1

3.0 7.8

1,149 1,398

To households Residential real estate Revolving home equity Consumer Originated4 Other5

15.6 43.8 8.8 6.0 7.4

12.0 13.3 3.1 .5 8.4

7.7 .0 6.7 7.1 12.0

8.2 3.9 5.8 5.5 1.9

-6.9 -10.4 9.0 7.2 15.1

5.8 5.1 -3.1 4.8 10.0

1,734 449 727 1,106 795

6.6 5.2 4.9 5.7

7.6 5.3 .0 13.3

12.8 13.0 8.3 19.4

3.5 3.2 6.1 -.6

-3.1 3.2 6.9 -1.8

-5.6 -5.1 -1.2 -10.1

1,990 2,144 1,216 928

Securities Adjusted2 Reported Treasury and agency Other6

Note. Yearly annual rates are Q4 to Q4; quarterly and monthly annual rates use corresponding average levels. Data are adjusted to remove estimated effects of consolidation related to FIN 46 and for breaks caused by reclassifications. 1. Billions of dollars. Pro rata averages of weekly (Wednesday) levels. 2. Adjusted to remove effects of mark-to-market accounting rules (FIN 39 and FAS 115). 3. Excludes interbank loans. 4. Includes an estimate of outstanding loans securitized by commercial banks. 5. Includes security loans and loans to farmers, state and local governments, and all others not elsewhere classified. Also includes lease financing receivables. 6. Includes private mortgage-backed securities, securities of corporations, state and local governments, foreign governments, and any trading account assets that are not Treasury or agency securities, including revaluation gains on derivative contracts.

-1-

-2-

III-T-1

Selected Financial Market Quotations (One-day quotes in percent except as noted) 2004

2005

Change to Oct. 19 from selected dates (percentage points)

2006

Instrument June 28

Dec. 30

Sept. 19

Oct. 19

2004 June 28

2005 Dec. 30

2006 Sept. 19

1.00

4.25

5.25

5.25

4.25

1.00

.00

1.36 1.74

3.99 4.22

4.82 4.90

4.97 4.96

3.61 3.22

.98 .74

.15 .06

Commercial paper (A1/P1 rates)2 1-month 3-month

1.28 1.45

4.23 4.37

5.25 5.25

5.25 5.24

3.97 3.79

1.02 .87

.00 -.01

Large negotiable CDs1 3-month 6-month

1.53 1.82

4.49 4.65

5.34 5.38

5.33 5.36

3.80 3.54

.84 .71

-.01 -.02

Eurodollar deposits3 1-month 3-month

1.29 1.51

4.36 4.52

5.33 5.39

5.32 5.36

4.03 3.85

.96 .84

-.01 -.03

Bank prime rate

4.00

7.25

8.25

8.25

4.25

1.00

.00

Intermediate- and long-term U.S. Treasury4 2-year 5-year 10-year

2.88 3.97 4.90

4.43 4.35 4.47

4.81 4.66 4.81

4.88 4.73 4.86

2.00 .76 -.04

.45 .38 .39

.07 .07 .05

U.S. Treasury indexed notes 5-year 10-year

1.56 2.25

2.03 2.10

2.41 2.39

2.59 2.50

1.03 .25

.56 .40

.18 .11

Municipal general obligations (Bond Buyer)5

5.01

4.38

4.30

4.33

-.68

-.05

.03

Private instruments 10-year swap 10-year FNMA6 10-year AA7 10-year BBB7 10-year high yield7

5.21 5.38 5.60 6.25 8.41

4.92 4.84 5.27 5.82 8.30

5.30 5.11 5.72 6.28 8.49

5.32 5.16 5.75 6.31 8.38

.11 -.22 .15 .06 -.03

.40 .32 .48 .49 .08

.02 .05 .03 .03 -.11

Home mortgages (FHLMC survey rate) 30-year fixed 1-year adjustable

6.21 4.19

6.21 5.16

6.40 5.54

6.36 5.57

.15 1.38

.15 .41

-.04 .03

Short-term FOMC intended federal funds rate Treasury bills1 3-month 6-month

Record high

2005

Change to Oct. 19 from selected dates (percent)

2006

Stock exchange index Dow Jones Industrial S&P 500 Composite Nasdaq Russell 2000 Wilshire 5000

Level

Date

Dec. 30

Sept. 19

Oct. 19

Record high

2005 Dec. 30

2006 Sept. 19

12,012 1,527 5,049 782 14,752

10-19-06 3-24-00 3-10-00 5-5-06 3-24-00

10,718 1,248 2,205 673 12,518

11,541 1,318 2,222 725 13,187

12,012 1,367 2,341 767 13,722

.00 -1.51 -53.63 -1.85 -6.98

12.08 9.51 6.15 13.99 9.62

4.08 3.69 5.34 5.78 4.05

1. Secondary market. 2. Financial commercial paper. 3. Bid rates for Eurodollar deposits collected around 9:30 a.m. eastern time. 4. Derived from a smoothed Treasury yield curve estimated using off-the-run securities. 5. Most recent Thursday quote. 6. Constant-maturity yields estimated from Fannie Mae domestic noncallable coupon securities. 7. Derived from smoothed corporate yield curves estimated using Merrill Lynch bond data. _______________________________________________________________________ NOTES: June 28, 2004, is the day before the most recent policy tightening began. September 19, 2006, is the day before the most recent FOMC announcement. _______________________________________________________________________