Embed Size (px)
Citation preview
Appendix 1: Materials used by Ms. Mosser
April 28–29, 2009 165 of 201Authorized for Public Release
(2) Commercial Bank CDS SpreadsAugust 1, 2008 – April 24, 2009
Source: Markit
(3) European Bank CDS SpreadsAugust 1, 2008 – April 24, 2009
Source: Bloomberg
0
50
100
150
200
250
300
350
400
450
0
50
100
150
200
250
300
350
400
450
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
BarclaysRBSHSBCDeutscheSociete GeneraleUBSCSFB
Sept.14: Lehman bankruptcy
Oct.13: Euro Area AnnouncementOct.14: Treasury, FDIC and Fed Announcement
Page 1 of 12
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
700
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
JPMorgan ChaseCitigroupBank of AmericaWells Fargo
Sept.14: Lehman bankruptcy
Oct.13: Euro Area AnnouncementOct.14: Treasury, FDIC and Fed Announcement
Class II FOMC – Restricted FR
Source: Markit
100
200
300
400
500
600
700
800
800
1000
1200
1400
1600
1800
2000
2200
09/26/08 10/26/08 11/26/08 12/26/08 01/26/09 02/26/09 03/26/09
BPSBPS
High Yield (LHS)Investment Grade (RHS)Investment Grade Financial (RHS)
(1) CDX Index PerformanceSeptember 26, 2008 – April 24, 2009
April 28–29, 2009 166 of 201Authorized for Public Release
Class II FOMC – Restricted FR
Source: Bloomberg
(4) Bank Earnings and Capital Ratios Q4 2008 – Q1 2009
*U.K. banks report semi-annually
Page 2 of 12
(5) Bank CDS Term StructuresApril 24, 2009
Source: Markit
0
150
300
450
600
750
900
0
150
300
450
600
750
900
6M 1Y 2Y 3Y 4Y 5Y 7Y 10Y 15Y 20Y 30Y
BPSBPS
Bank of America Citigroup
JP Morgan Wells Fargo
Goldman Sachs Morgan Stanley
April 28–29, 2009 167 of 201Authorized for Public Release
25
50
75
100
125
150
175
25
50
75
100
125
150
175
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
Mar18: FOMC
Class II FOMC – Restricted FR
Source: Federal Reserve Bank of NY
(6) Three-Month Euro-Dollar Implied FX Swap Spread to LIBORAugust 1, 2008 – April 24, 2009
Page 3 of 12
(7) 10-Year Treasury Price Error to Board ModelAugust 1, 2008 – April 24, 2009
Source: Federal Reserve Bank of NY
70
90
110
130
150
170
190
210
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
01/01/08 04/01/08 07/01/08 10/01/08 01/01/09 04/01/09
BPSPercent
Conforming Mortgage Rate (LHS)Jumbo Mortgage Rate (LHS)Spread (RHS)
Nov25: Agency Coupon and Agency-MBS Purchases
Jan5: First Agency-MBS Purchase
Mar18: FOMC
(8) Jumbo and Conforming Mortgage RatesJanuary 1, 2008 – April 24, 2009
Source: Bloomberg
0
50
100
150
200
250
0
50
100
150
200
250
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
April 28–29, 2009 168 of 201Authorized for Public Release
Page 4 of 12
0.500.751.001.251.501.752.002.252.502.75
2.002.252.502.753.003.253.503.754.004.25
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
PercentPercent
10-Year (LHS)2-Year (RHS)
Mar18: FOMC
Jan28: FOMC
Dec1: Speech discussing Treasury purchases
Source: Bloomberg
(9) Treasury YieldsAugust 1, 2008 – April 24, 2009
100
125
150
175
200
225
250
275
300
100125150175200225250275300
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
1-Month SMOVE IndexMOVE Index
Mar18 FOMC
Jan28: FOMC
Dec1: Speech discussing Treasury purchases
Source: Bloomberg
(10) Implied Volatility in the Treasury and Swaps Markets August 1, 2008 – April 24, 2009
Class II FOMC – Restricted FR
Source: Federal Reserve Bank of New York
(11) Planned and Executed Treasury Purchases As of April 28, 2009
01020304050607080
1-2 yrs 2-3 yrs 3-4.5 yrs 4.5-7 yrs 7-10 yrs 10-17 yrs 17-30 yrs TIPS
$ Billions
Planned
Executed
April 28–29, 2009 169 of 201Authorized for Public Release
Class II FOMC – Restricted FR
(14) Purchase Programs As of April 24, 2009
Source: FRBNY estimates, U.S. Treasury
0
400
800
1200
1600$ Billions
MBS
Longer-term Treasury securities
Fed Purchases
Remainder of 2009 Estimates
IssuanceFed PurchasesYTD
IssuanceYTD
Source: Federal Reserve Bank of New York
(12) Daily Outright Agency-MBS Purchases January 5, 2009 – April 24, 2009
0
1
2
3
4
5
6
7
8
0
1
2
3
4
5
6
7
8
1/5/09 1/14/09 1/26/09 2/4/09 2/13/09 2/25/09 3/6/09 3/17/09 3/26/09 4/6/09 4/16/09
$ Billions$ Billions
PurchasesMoving AveragePost-FOMC
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
01/01/08 03/01/08 05/01/08 07/01/08 09/01/08 11/01/08 01/01/09 03/01/09
PercentPercent
Fannie CC (LHS)Freddie Fixed Conforming Mortgage Rate (LHS)Blended 5- and 10-Year Tsys (RHS)
Jan5: First MBS Purchase
Nov25: Agency-MBS Purchase
Announcement Mar18: FOMC
(13) 30-Year Primary and Secondary Mortgage RatesJanuary 1, 2008– April 24, 2009
Source: Bloomberg
Page 5 of 12
April 28–29, 2009 170 of 201Authorized for Public Release
Source: JPMorgan Chase
(15) Three-Year AAA-Rated Asset-Backed Security Spreads August 1, 2008 – April 24, 2009
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
700
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
Prime Auto
Credit Card
FFELP Student Loan
Equipment
Sept.14: Lehman Brothers Holdings files for bankruptcy
Nov.25: TALF announced Dec.19: Preliminary FAQs Released
Mar.19: First TALF Subscription
Source: JPMorgan Chase
(16) ABS Issuance Q1 2007 – April 2009
Class II FOMC – Restricted FR
0
5
10
15
20
25
30$ Billions
Credit Cards TALFAutos TALFCredit Cards Non-TALFAutos Non-TALF
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Apr09
Source: Federal Reserve Bank of New York
(17) Amount of CPFF Loans Outstanding October 27, 2008 – April 24, 2009
0
50
100
150
200
250
300
350
400
0
50
100
150
200
250
300
350
400
10/27/08 11/27/08 12/27/08 01/27/09 02/27/09 03/27/09
$ Billions$ Billions
CP
FDIC Guaranteed CP
ABCP
Page 6 of 12
April 28–29, 2009 171 of 201Authorized for Public Release
(19) Distribution of Expected Policy Target Rate Among Primary Dealers Prior to April 29 FOMC Meeting
Source: Dealer Policy Survey
-1.0-0.50.00.51.01.52.02.53.03.54.0
Percent
Survey Response -size indicates freq
April Average Forecast
Market Rates as of 4/20
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
Class II FOMC – Restricted FR
Source: Federal Reserve Bank of New York
(18) Balance Sheet Assets by Category August 1, 2008 – April 22, 2009
0
500
1000
1500
2000
2500
3000
0
500
1000
1500
2000
2500
3000
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
$ Billions$ Billions
Type 5: All OtherType 4: Lending to Systemically Important InstitutionsType 3: Short-Term Liquidity Facilities: TAF, Liqudity Swaps, CPFF, AMLF, MMIFF, PCF and PDCFType 2: Agency MBS, Agency Debt, Agency Discount Notes and New Long-Term Treasury PurchasesType 1: Legacy Treasuries
Page 7 of 12
April 28–29, 2009 172 of 201Authorized for Public Release
Page 8 of 12
(20) Commercial Bank Equity PricesAugust 1, 2008 – April 24, 2009
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
Index to 100 on 8/1/08Index to 100 on 8/1/08
JPMorgan ChaseCitigroupBank of AmericaWells FargoS&P 500 Sept.14: Lehman Brothers Holdings files for bankruptcy
Source: Bloomberg(21) European Bank Equity Prices
August 1, 2008 – April 24, 2009
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
Index to 100 on 8/1/08Index to 100 on 8/1/08
BarclaysRBSHSBCDeutscheSociete GeneraleUBSCredit Suisse
Sept.14: Lehman Brothers Holdings files for bankruptcy
Source: Bloomberg
Source: Bloomberg
(22) Other Financial Equity PricesAugust 1, 2008 – April 24, 2009
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
Index to 100 on 8/1/08Index to 100 on 8/1/08
Morgan StanleyGoldman SachsS&P 500PrudentialMetLifeGE Sept.22: Goldman and Morgan Stanley become bank holding companies
Sept.14: Lehman Brothers Holdings files for bankruptcy
Class II FOMC – Restricted FRAPPENDIX: Reference Exhibits
April 28–29, 2009 173 of 201Authorized for Public Release
40
50
60
70
80
90
100
110
40
50
60
70
80
90
100
110
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
Index to 100=8/1/08Index to 100=8/1/08
DJ Euro StoxxTopix, JapanEM Index, Morgan StanleyS&P 500
(23) Global EquitiesAugust 1, 2008 – April 24, 2009
Source: Bloomberg
Class II FOMC – Restricted FR
11.4%
3.0%
11.2%
5.9%
0
3
6
9
12
15
0
3
6
9
12
15PercentPercent
8 Large Banks
14 Regional Banks
Tier 1 Ratio Tangible Common Equity Ratio
Source: Goldman Sachs
(24) Bank Capital RatiosQ4 2008
Page 9 of 12
0200400600800100012001400160018002000
0200400600800
100012001400160018002000
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
Morgan StanleyGoldman SachsGEPrudentialMetLife
Sept.22: Goldman and Morgan Stanley become bank holding companies
Sept.14: Lehman Brothers Holdings files for bankruptcy
Oct.13: Euro Area AnnouncementOct.14: Treasury Capital Purchase Program, FDIC Debt Guarantee, and further details of Federal Reserve CPFF Program Announced
(25) Other Financial CDS Spreads August 1, 2008 – April 24, 2009
Source: Markit
April 28–29, 2009 174 of 201Authorized for Public Release
0
1
2
3
4
5
6
7
8
0
1
2
3
4
5
6
7
8
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
PercentPercent
AA-Rated Non-Financial CPAA-Rated Financial CPAA-Rated ABCPA2/P2 Non-Financial CP
Oct.7: CPFF announced (effective Oct.27)
Sept.19: AMLF announced
Sept.14: Lehman Brothers Holdings
files for bankruptcy
Oct.21: MMIFF announced
Class II FOMC – Restricted FR
(26) Market Rates Corresponding to Liquidity Facilities August 1, 2008 – April 23 2009
0.000.501.001.502.002.503.003.504.004.505.00
0.000.501.001.502.002.503.003.504.004.505.00
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
PercentPercent
1M GC Treasury Repo1M Agency-MBS Repo1M USD Libor3M USD Libor3M Financial CP
Sept.14: Lehman Brothers
Holdings files for bankruptcy
Year End
Source: Federal Reserve Bank of New York(27) Three-Month Commercial Paper Rates
August 1, 2008 – April 22, 2009
Source: Federal Reserve Board
Page 10 of 12
(28) Commercial Mortgage-Backed and Leveraged Loan Prices August 1, 2008 – April 24, 2009
556065707580859095100
556065707580859095
100
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
DollarDollar
CMBX Series 2 (2006)CMBX Series 4 (2007)LCDX
Source: Barclays, JPMorgan Chase
April 28–29, 2009 175 of 201Authorized for Public Release
Class II FOMC – Restricted FR
0
2000
4000
6000
8000
10000
12000
14000
0
250
500
750
1000
1250
1500
1750
2000
01/04/90 01/04/93 01/04/96 01/04/99 01/04/02 01/04/05 01/04/08
Index=100 on 1/1/90Index=100 on 1/1/90
Mortgage Application Index (LHS)
Mortgage Refinance Application Index (RHS)
(29) Mortgage Refinance ApplicationsJanuary 1, 1980 – April 24, 2009
Source: Bloomberg
Page 11 of 12
(30) Mortgage and Agency Yields and Spreads January 5, 1990 – April 24, 2009
Source: Bloomberg
-25
0
25
50
75
100
125
150
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
01/05/90 01/05/93 01/05/96 01/05/99 01/05/02 01/05/05 01/05/08
BPSPercent
Fannie CC (LHS)
Freddie 30Y Fixed Conforming Mortgage Rate (LHS)
-12-9-6-30369
12
3/2/09 3/6/09 3/12/09 3/18/09 3/24/09 3/30/09 4/3/09 4/9/09 4/16/09 4/22/09
$ Billions
Doll Roll Sale
Dollar Roll Purchase
Source: Federal Reserve Bank of New York
(31) Dollar Roll Purchases and Sales March 2, 2009 – April 22, 2009
April 28–29, 2009 176 of 201Authorized for Public Release
Class II FOMC – Restricted FR
0
250
500
750
1,000
1,250
1,500
1,750
0
250
500
750
1,000
1,250
1,500
1,750$ Millions$ Millions
March
April
Source: Federal Reserve Bank of New York
(32) Consumer ABS Investors Using TALF FinancingMarch 2009 – April 2009
Page 12 of 12
100
150
200
250
300
100
150
200
250
300
01/01/88 01/01/92 01/01/96 01/01/00 01/01/04 01/01/08
BPSBPS
NBER Recession
Blended Spread
(33) Spread between Fannie Current Coupon and Blended 10- and 5-Year Treasury YieldsJanuary 1988 – March 2009
Source: Bloomberg
100
120
140
160
180
200
100
120
140
160
180
200
08/01/08 09/01/08 10/01/08 11/01/08 12/01/08 01/01/09 02/01/09 03/01/09 04/01/09
BPSBPS
6M, 6M Forward 10Y Swaption Implied Vol6M, 10Y Swaption Implied Vol
Source: Barclays Capital
(34) 6-Month and 6-Month Forward Swaption Implied Volatility August 1, 2008 – April 24, 2009
April 28–29, 2009 177 of 201Authorized for Public Release
Appendix 2: Materials used by Messrs. Carpenter and Burke
April 28–29, 2009 178 of 201Authorized for Public Release
Exhibit 1 Balance Sheet Assumptions
Federal Reserve liquidity and credit facilities
0
20
40
60
80
100
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
PCF/SCF
0
100
200
300
400
500
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
TAF
0
100
200
300
400
500
600
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
Swap Lines
0
100
200
300
400
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
CPFF
0
50
100
150
200
250
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
TALF v 1.0
Alternative TALF
Baseline andAlternative A
0
200
400
600
800
1000
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
TALF v 2.0/3.0
Baseline and Alternative A
Alternative TALF
0
10
20
30
40
50
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
Credit extended to AIG
0
10
20
30
40
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
AMLF and PDCF
PDCF
AMLF05101520253035
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
Maiden Lanes
Maiden Lane LLC
Maiden Lane LLC II
Maiden Lane LLC III
Note: All values are in billions.
Securities
0
200
400
600
800
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
Temporary Holdings of Longer‐term Treasuries
Baseline
Alternative A and Alternative TALF
0
200
400
600
800
1000
1200
1400
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
MBS
Note: All values are in billions.
Federal Reserve liabilities
0200400600800100012001400
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
Federal Reserve Notes
0
50
100
150
200
250
300
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
TGA and SFP
TGA
SFP
Note: All values are in billions.
0
50
100
150
200
250
Dec‐08 Dec‐10 Dec‐12 Dec‐14 Dec‐16
Agency Debt
April 28–29, 2009 179 of 201Authorized for Public Release
Exhibit 2 Balance Sheet Projections
Baseline
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
$ Billions
Federal Reserve Assets
Treasuries Agency debt MBS Repurchase agreements
Swaps TALF Other liquidity facilities Other assets
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
$ Billions
Federal Reserve Liabilities and Capital
Federal Reserve notes Reverse repurchase agreementsDeposits, other than reserve balances Reserve balancesOther liabilities Capital
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
April 28–29, 2009 180 of 201Authorized for Public Release
Exhibit 3
Growth of monetary base
(percent, annual rate)
Date Baseline Alternative AAlternative
TALF Monthly
May-09 123.0 150.0 177.0 Jun-09 113.2 135.0 155.8 Jul-09 134.9 151.7 167.2
Aug-09 121.3 134.6 146.7 Sep-09 110.1 121.1 130.8 Oct-09 78.7 110.0 117.9 Nov-09 73.9 100.7 107.4 Dec-09 62.8 86.8 92.9
Quarterly
Q2 2009 50.9 60.1 69.3 Q3 2009 135.9 157.2 177.6 Q4 2009 93.1 120.2 129.9 Q1 2010 10.8 19.9 26.2 Q2 2010 -15.9 -13.9 -7.6 Q3 2010 -16.6 -14.4 -7.7 Q4 2010 -17.4 -15.1 -8.0
Annual (Q4 to Q4)
2009 93.2 120.3 138.4 2010 -15.6 -13.7 -7.6 2011 -10.5 -9.7 -8.4 2012 -21.8 -21.7 -15.5 2013 -23.3 -22.7 -11.7 2014 -13.2 -16.4 -27.3 2015 -7.6 -19.7 -36.3 2016 4.8 4.8 4.8
April 28–29, 2009 181 of 201Authorized for Public Release
Exhibit 4 Balance Sheet Projections
Alternative A
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
$ Billions
Federal Reserve Assets
Treasuries Agency debt MBS Repurchase agreements
Swaps TALF Other liquidity facilities Other assets
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
$ Billions
Federal Reserve Liabilities and Capital
Federal Reserve notes Reverse repurchase agreementsDeposits, other than reserve balances Reserve balancesOther liabilities Capital
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
April 28–29, 2009 182 of 201Authorized for Public Release
Exhibit 5 Balance Sheet Projections
Alternative TALF
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
$ Billions
Federal Reserve Assets
Treasuries Agency debt MBS Repurchase agreements
Swaps TALF Other liquidity facilities Other assets
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
$ Billions
Federal Reserve Liabilities and Capital
Federal Reserve notes Reverse repurchase agreementsDeposits, other than reserve balances Reserve balancesOther liabilities Capital
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
April 28–29, 2009 183 of 201Authorized for Public Release
Appendix 3: Materials used by Messrs. Stockton and Sheets
April 28–29, 2009 184 of 201Authorized for Public Release
CLASS II FOMC - Restricted (FR)
Material for
Recent Economic Indicators
April 28, 2009
April 28–29, 2009 185 of 201Authorized for Public Release
April 28–29, 2009 186 of 201Authorized for Public Release
Class II FOMC - Restricted (FR) Exhibit 2
Signs of Bottoming Out?
30
40
50
60
70
80
90
100 110
Jul Sep Nov Jan Mar May
Equity PricesIndex, Jun. 3, 2008 = 100
Weekly
Emergingmarkets
UnitedKingdom
EuroareaJapan
Mar.FOMC
2008 2009
25
30
35
40
45
50
55
60
65
70
2007 2008
Purchasing Managers Indexes*Advanced Foreign Economies
Diffusion index
Canada
U.K.
Euroarea
Japan
* Total economy PMIs; Manufacturing PMI for Canada.
20
40
60
80
100
120
140
160
2007 200820
40
60
80
100
120
140
160
Commodity Price DevelopmentsDollars per barrelIndex, Jan. 3, 2007 = 100
Daily
WTI oil
CRB nonfuel
Peak oil price
35
40
45
50
55
60
65
2007 2008
Purchasing Managers Indexes*Emerging Market Economies
Diffusion index
Brazil
China
India
* Manufacturing sector.
60
70
80
90
100
110
2007 2008
Industrial ProductionIndex, Jan. 2007 = 100
CanadaU.K.
Euro area
Japan
85
90
95
100
105
110
115
120
125
130
135
2007 2008
Industrial ProductionIndex, Jan. 2007 = 100
Mexico
China
Korea
Brazil
70
80
90
100
110
120
130
140
150
2007 2008
ExportsIndex, Jan. 2007 = 100
Mexico
China
Korea
April 28–29, 2009 187 of 201Authorized for Public Release
Appendix 4: Materials used by Mr. Madigan
April 28–29, 2009 188 of 201Authorized for Public Release
Class I FOMC – Restricted Controlled (FR) Material for Briefing on FOMC Participants’ Economic Projections Brian Madigan April 28, 2009 Corrected
April 28–29, 2009 189 of 201Authorized for Public Release
Exhibit 1. Economic Projections of Federal Reserve Governors and Reserve Bank Presidents, April 2009
(Percent)
Variable Central tendency Range
2009 2010 2011 Longer Run 2009 2010 2011 Longer Run
Change in real GDP (Q4/Q4)
April projection. . . . . . . . . . -2.0 to -1.3 2.0 to 3.0 3.5 to 4.8 2.5 to 2.7 -2.5 to -0.5 1.5 to 4.0 2.3 to 5.0 2.4 to 3.0
January projection. . . . . . -1.3 to -0.5 2.5 to 3.3 3.8 to 5.0 2.5 to 2.7 -2.5 to 0.2 1.5 to 4.5 2.3 to 5.5 2.4 to 3.0
Memo: April Greenbook. . . -1.6 2.6 4.8 2.7
Unemployment rate (Q4)
April projection. . . . . . . . . . 9.2 to 9.6 9.0 to 9.5 7.7 to 8.5 4.8 to 5.0 9.1 to 10.0 8.0 to 9.6 6.5 to 9.0 4.8 to 5.3
January projection. . . . . . 8.5 to 8.8 8.0 to 8.3 6.7 to 7.5 4.8 to 5.0 8.0 to 9.2 7.0 to 9.2 5.5 to 8.0 4.5 to 5.5
Memo: April Greenbook. . . 9.3 9.1 7.7 4.8
PCE inflation (Q4/Q4)
April projection. . . . . . . . . . 0.6 to 0.9 1.0 to 1.6 1.0 to 1.9 1.7 to 2.0 -0.5 to 1.5 0.7 to 2.0 0.5 to 2.5 1.5 to 2.0
January projection. . . . . . 0.3 to 1.0 1.0 to 1.5 0.9 to 1.7 1.7 to 2.0 -0.5 to 1.5 0.7 to 1.8 0.2 to 2.1 1.5 to 2.0
Memo: April Greenbook. . . 0.7 1.0 0.8 2.0
Core PCE inflation (Q4/Q4)
April projection. . . . . . . . . . 1.0 to 1.5 0.7 to 1.3 0.8 to 1.6 0.7 to 1.6 0.5 to 2.0 0.2 to 2.5
January projection. . . . . . 0.9 to 1.1 0.8 to 1.5 0.7 to 1.5 0.6 to 1.5 0.4 to 1.7 0.0 to 1.8
Memo: April Greenbook. . . 1.2 0.7 0.7
April 28–29, 2009 190 of 201Authorized for Public Release
2
4
6
8
10
12
14
16
18
Number of participants
Exhibit 2. Risks and Uncertainty in Economic Projections
Uncertainty about GDP Growth
January projections
Lower Similar Higher
April projections
2
4
6
8
10
12
14
16
18
Number of participants
Uncertainty about PCE Inflation
Lower Similar Higher
2
4
6
8
10
12
14
16
18
Number of participants
Risks to GDP Growth
January projections
Downside Balanced Upside
April projections
2
4
6
8
10
12
14
16
18
Number of participants
Risks to PCE Inflation
Downside Balanced Upside
April 28–29, 2009 191 of 201Authorized for Public Release
Appendix 5: Materials used by Mr. Stockton
April 28–29, 2009 192 of 201Authorized for Public Release
Class II FOMC - RESTRICTED (FR)
Page 1 of 1
2008-Q4Final Greenbook Advance
Real GDP -6.3 -6.3 -6.1
Final Sales -6.2 -4.1 -3.4 Personal Consumption -4.3 1.1 2.2 Durables -22.1 6.0 9.4 Nondurables -9.4 1.1 1.3 Services 1.5 0.4 1.5
Business Fixed Investment -21.7 -30.1 -37.9 Nonresidential Structures -9.4 -26.4 -44.2 Equipment and Software -28.1 -32.4 -33.8
Residential Investment -22.8 -38.2 -38.0
Government 1.3 -5.3 -3.9 Federal 7.0 -9.4 -4.0 State and Local -2.0 -2.6 -3.9
Exports -23.6 -31.4 -30.0
Imports -17.5 -31.1 -34.1
Level in chained 2000 dollars:
Change in nonfarm business inventories -31.1 -96.3 -111.7
Change in farm inventories 3.7 3.0 5.0
Net Exports -364.5 -333.4 -308.4
Price Indexes:
Total PCE Chain Price Index -4.9 -0.9 -1.0 Core PCE Chain Price Index 0.9 1.7 1.5
Gross Domestic Product(percent change at an annual rate)
2009-Q1
April 28–29, 2009 193 of 201Authorized for Public Release
Appendix 6: Materials used by Mr. Madigan
April 28–29, 2009 194 of 201Authorized for Public Release
Class I FOMC – Restricted Controlled (FR)
Material for Briefing on Monetary Policy Alternatives Brian Madigan April 29, 2009
April 28–29, 2009 195 of 201Authorized for Public Release
CLASS I FOMC – RESTRICTED CONTROLLED (FR)
March FOMC Statement
Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.
In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments.
April 28–29, 2009 196 of 201Authorized for Public Release
CLASS I FOMC – RESTRICTED CONTROLLED (FR)
April FOMC Statement — Alternative A
1. Information received since the Federal Open Market Committee met in March indicates that the economy continues to contract, though the pace of contraction appears to be slowing somewhat. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Job losses, lower housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, the Committee anticipates that economic activity will continue to contract in the near term and that the subsequent recovery could be sluggish.
2. In light of increasing economic slack here and abroad, the Committee expects that
inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that are most consistent with sustainable economic growth and price stability in the longer term.
3. In these circumstances, the Committee has decided to provide additional monetary
stimulus by stepping up its purchases of longer-term securities. To improve conditions in private credit markets, the Federal Reserve has recently begun purchasing longer-term Treasury securities, and the Committee now intends to acquire up to $750 billion of these securities by year-end. The Committee continues to anticipate that the Federal Reserve will purchase up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt over the course of this year. The Committee is prepared to make further adjustments to the timing and overall amounts of these purchases of Treasury, agency, and mortgage-backed securities as appropriate in view of the evolving economic outlook and conditions in financial markets. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.
April 28–29, 2009 197 of 201Authorized for Public Release
CLASS I FOMC – RESTRICTED CONTROLLED (FR)
April FOMC Statement — Alternative B
1. Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be slowing somewhat. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Job losses, lower housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth.
2. In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
3. In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee stands ready to adjust the timing and overall amounts of its purchases of securities as appropriate in view of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.
April 28–29, 2009 198 of 201Authorized for Public Release
CLASS I FOMC – RESTRICTED CONTROLLED (FR)
April FOMC Statement — Alternative B′
1. Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be slowing somewhat. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Job losses, lower housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth.
2. In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
3. In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. As of the end of March, the Federal Reserve had completed purchases of about $310 billion of this $1.75 trillion total, bringing its portfolio of Treasury and agency securities to $780 billion. The Committee expects its purchases to average about $160 billion per month through year-end, equivalent to an average growth rate for this portfolio of around 20 percent per month over the last nine months of the year. The Committee stands ready to adjust the timing and overall amounts of its purchases of securities as appropriate in view of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.
April 28–29, 2009 199 of 201Authorized for Public Release
CLASS I FOMC – RESTRICTED CONTROLLED (FR)
April FOMC Statement — Alternative B′′
1. The Federal Open Market Committee decided today to continue to increase the Federal Reserve’s holdings of longer-term Treasury securities, agency debt, and agency MBS in a manner consistent with our previous announcements. The Committee expects the combined holdings of these securities to increase from current levels at an average rate of about 18 to 20 percent per month over the near term. The Committee stands ready to adjust the timing and overall amounts of its purchases of these securities as appropriate in view of the evolving economic outlook and conditions in financial markets.
2. Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be slowing somewhat. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Job losses, lower housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth.
3. In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
4. In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to ¼ percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The Federal Reserve is also facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of financial and economic developments.
April 28–29, 2009 200 of 201Authorized for Public Release
CLASS I FOMC – RESTRICTED CONTROLLED (FR)
April FOMC Statement — Alternative B′′′
1. The Federal Open Market Committee decided today to continue to increase the Federal Reserve’s holdings of longer-term Treasury securities, agency debt, and agency MBS in a manner consistent with our previous announcements. The Committee expects the combined holdings of these securities to increase from current levels by about $160 billion per month over the near term. The Committee stands ready to adjust the timing and overall amounts of its purchases of these securities as appropriate in view of the evolving economic outlook and conditions in financial markets.
2. Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be slowing somewhat. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Job losses, lower housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth.
3. In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
4. In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to ¼ percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The Federal Reserve is also facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of financial and economic developments.
April 28–29, 2009 201 of 201Authorized for Public Release
