July 31, 1958 FOMC Minutes: Full Text
A meeting of the Federal Open Market Committee was held on Thursday, July 31, 1958, at 11:00 a.m. This was a telephone conference meeting and each individual was in Washington except as otherwise indicated in parentheses in the following list of those participating: PRESENT: Mr. Balderston, presiding Mr. Irons (Dallas) Mr. Leach (Richmond) Mr. Mangels (San Francisco) Mr. Mills Mr. Robertson Mr. Vardaman Mr. Treiber, Alternate for Mr. Hayes (New York) Mr. Riefler, Secretary Mr. Thurston, Assistant Secretary Mr. Solomon, Assistant General Counsel Mr. Thomas, Economist Mr. Young, Associate Economist Mr. Rouse, Manager, System Open Market Account (New York) Mr. Molony, Special Assistant to the Board of Governors Mr. Kenyon, Assistant Secretary, Board of Governors Mr. Koch, Associate Adviser, Division of Research and Statistics, Board of Governors Mr. Keir, Acting Chief, Government Finance Section, Division of Research and Statistics, Board of Governors Mr. Marsh, Assistant Vice President, Reserve Bank of New York (New York) Federal Mr. Stone, Manager, Securities Department, of New York (New York) Federal Reserve Bank was look securities market that the Government Mr. Marsh stated was again firm through had been. The market better than it ing very much of as showed gains end, issues In the longer this morning. the list out
much as 1/4 of a point, and there were smaller gains in other parts of the list. The underlying atmosphere seemed to be reasonably favorable to a stable market, and the dealers felt that the market had adjusted to a good trading level. Yesterday saw some fairly good buying, not heavy but enough to give the dealers some encourage ment, and they felt that the rate structure had adjusted to the point where buyers should be expected to buy if the market did not "fall out of bed" again. There was still some apprehension about the speculators. The dealers realized that there were still speculative holdings that could come out, but at the moment they were reasonably optimistic. Current bids were 99-10/32 on the 3-1/2s of 1990 and the 2-5/8s of 1965, which for the latter was 4 or 5 32ds 97-8/32 on above last night's close. The short new issues were a little higher and at present stood just below par. The corporate and municipal markets had a steady tone, as they did yesterday. Mr. Marsh said that the market was now awaiting announcement of the allotment on the new 1-1/2 per cent tax antici by the Treasury the New York Bank heard from the pation certificates. Last night reached $5.895 billion, and the that subscriptions had Treasury would bring the total felt that additional subscriptions Treasury would mean an allotment just under up to about $6 billion. That view that such an announcement cent, and it was Mr. Marsh's 60 per much disturbance to the market. received without too would be
Mr. Marsh then commented briefly on the money market, which remained easy. He said that last night's actual free reserve figure was substantially lower than had been projected because of yesterday's sales of bills from the System Account. Average free reserves for the statement week which ended yesterday were found to be $529 million, which reflected bill sales yesterday for cash in the amount of $118 million. In addition, $5 million of bills were sold for regular delivery. The estimate for free reserves today was $870 million, but in spite of a substantial rise projected for tomorrow it was estimated that the average for the current state ment week would be around $800 million. This estimate took into account bill sales already made and a Treasury balance well above balance of $629 million was $500 million. For today a Treasury and for the rest of the statement week a level around projected, Thus, the Treasury balance was expected to be of $700 million. help in mopping up reserves. Mr. Marsh reported that yesterday's selling of bills in the The dealers bid for over $300 million market was very successful. he had said, the Account sold them about $125 million, and, as a demand for more bills at all for cash. There was practically the Management of the Account later in the day, but better prices to take another look today. No decided to let the market rest and that was what the more bills, and expected in selling trouble was
Account planned to do at the moment, subject to a further look at the market following this meeting. The Account might sell another $125 million for cash or regular delivery. Mr. Marsh said that dealers' positions in bills went down $56 million yesterday in spite of the sales of bills, so the dealers sold more bills than the System made available. Mr. Marsh also said that there had been no significant activity in the new tax certificates. Holders were apparently content to hold on, prices were just below par, and it was a very satisfactory situa tion at the moment. Mr. Leach said that it looked like a very good day to do some more selling of bills, with prices firm and demand good. He would favor selling a substantial amount. Messrs. Balderston and Robertson expressed agreement with Mr. Leach's comments. stated that it was proposed to include the Mr. Balderston the text accompanying the weekly statement following statement in Reserve Banks, to be released later of condition of the Federal today: As noted in last week's statement, of U. S. Government securities holdings million of the new do not include $1,090 of Treasury certificates 1-5/8 per cent purchased on a when-issued indebtedness, delivery on August 1. basis for
After a brief discussion, Messrs. Treiber and Rouse indicated that the proposed statement was agreeable to them. It was stated that another telephone meeting of the Committee would be held tomorrow at 11:00 a.m. The meeting then adjourned.