Financial Indicators

May 16.I989

Char( 1

The Yield Curve Spread Between 30-year T-Bond Yield and Feded Funds Rate"
7

Percentage Pohts
- 6

Selected Treasury Yield Cutves

r..
I
I

Percent
10

, * * .

L

.... .... . .

9.8

9.6

'-*

-

. -. ----___ --.- - - - - - - - 9.4 ----__ -----_____ ----__ --__ March 28.1989 - - - - - - - - 9.2
-9

-

May 12,1989

8.8

- 8.6

Chm2

Stock Indices and the Exchange Value o the Dollar
f
Monthly

7

Index Level. 19414-10

P

T

P T

P

T

G-10 Index
P P

Index Level. March 1973-100

I

I

I
1976 1978

1968 1970 1972 1974 + Indca~es 08l rextdWeSMy vslw m

1

i
1

11 9

dw
1984 1986
1988

Char( 3

Standard and Poor's 500 and G-10 Index (Real Measures)

Monthlv Standard and Poor's Stack Index

Index Level (Dmlasd)

-

300

250

m

150

10 0

Monthly 0-10 Index
Index Levd (Danaq
160

140

120

loo

3 0

10

I

Chad 4

Short-Term Real Interest Rates

1-year T-Bill Minus 1-year Inflation Expedations (Michigan)

Percent

I
I

- 5

I

I

I

I

I

I

I

I

I

I

c

- 10

+
0 -

-

- 5

I

I

I

I

I

I

I

I

I

I

I

I

10

CIIa,,

s

I n f l a t i o n Expectations (Hoey Survey) Survey Date Next 12 months
First 5 years

Second 5 years

10-year averaqe

---------------annual rate,
1986: Q4 1987: J a n u a r y March May June August September November
1988: J a n u a r y March
April

percent---------------------

3.6 3.8 4.0
4. 1

4.1

5.5
5.4 5.8 5.4

5.1 5.1 5.5 5.3 5.3 5.5 5.4 5.1 5.3 5.2 5.1 5.0 4.9 4.8 4.7 4.6 4.7 4.7

4.6 4.9 4.7 4.1 4.5 4.3 4.7 5.1 5.3 4.9 4.8 5.0

4.9 5.2 5.3 5.2 5.4 5.3 5.0
5.2

5.3 5.7 5.6 5.3
5.5

June August October November December
1989: February
April

5.0 5.1 5.1 5.1 4.1 4.6 4.6
4.7 4.8

5.3
5.0 4.9 4.8 4.9 4.1 4.6 4.7 4.6

5.3 5.7

LONG-TERM REAL INTERESTRATE

10-year Treasury bond yield less 10-year

average inflation expectation (Hw

r

I
1978

I

I
1980

I

I
1982

I

I
1984

I

I
1986

I
1988

0

+ - Denoces most men1 weekly “due taso mOSl resent inlleuon *

~ a l i m

ChM6

Nominal and Real Corporate Bond Rates
Quactedy
Percent

18

16

14

12

10

8

6

4

I
1979

I

I
1981

I

I
1W3

I

I
1985

I

I
1987

I

I
1%

2

1. Yield on Moodfs A-rated caporate bonds, all industries.
2 Nominal rate less Hoey survey of ten-year inflation expectations. + Denotes most recent weeldy value.

Char( 7

Experimental Price Index for 21 Cornmodities(Weekly)

-

- 180
- 160

-

- 140

Chart 8

Growth Rate, Velocity, & Opportunity Cost of M2
(Quarterly Data)
Gmvth o Nominal M 2 f
Sessonally Adjusted Annual Rate

-

30

P

T

T P

T

1959

1964

19 i

1.9

h
19
P
85

20

10

11 11
191 1984
1989

0

16 14 12 1 0

1.8

9

I
1.7

Forecast

-

s
4

,i
2
1.6
I ‘

J

1.5

I I
1959 1964 1969 197.
Two quarter movlng “erege.

u
1979

M2 opportunity Cost‘

l l l l l l l l
1984 1989

0.5

Chart 9

Growth of Real M2 and M3
M2
Percent T T
T P T

1 l4

I

1 1 1 1 1 1 1 1

1962 1965 1968 1971 1974 1977

M3

-
P T P T T

Percent

1 l4

1959

NOTE: Four quarter W n g average deflaled by the CPI.

L
1962 1965 1968

1

1974

1977

1980

Chad 10

M2

Chart 11

Inflation Indicator Based on M2

- 100
I

I I

#
y
Lu

1 1 1
I 111

I I Ill

I I I I I I 1-50 I I I I I I I I

12

J

u
1
1975

'2

111
11
1980

9

6

I
I I I I
1990

3

0

1985

+Change in GNP implicit deflator over the previous four quarters. Note: Price leveland Inflationfor 1989Q2 - 1990Q4 are forecasts from P' model. using staff money projections in calculating P'. Verlical lines mark crossing of P and P".