Saturday, 16 February 2013

U.S. Money, Credit & Treasuries Review (as of 6 Feb-13)

U.S. Money, Credit and Treasuries Review as of 6 February 2013
The broad measures of money supply in the U.S. continue to increase substantially on last year for the bi-weekly period ending 6 February 2013. 

The M2 money supply was up 7.09% on the same period last year, but perhaps more interesting in recent weeks is the increase in M2+IMF+LTD*. For the last  four bi-weekly periods it has increased at the fastest pace since the middle of 2009. For this week it ended 6.04% higher than one year ago compared to an average of 4.3% for 2012. 

Bank Credit also continues to increase on last year, but at 4.7% for the week the increase in bank credit appears to have slowed down in recent weeks compared to the 6% increase we saw during the summer last year (and at the end of December). All money supply values and bank credit are near all-time highs.

The 1-Year and 10-Year U.S. treasury yields remain extremely low in a historical perspective and compared to one year ago the 1-Year treasury yield has increased 0.02 percentage points (from 0.13% to 0.15%). During the last two weeks it increased 0.01 percentage point. The 10-Year treasury yield increased by 0.08 percentage points compared to same period last year, but more interestingly, it increased 0.13 percentage points compared to two weeks ago. The spread between the 10-Year and the 1-Year treasury yield is currently 1.85 percentage points, which is a slight increase from one year ago, but up a not insignificantly 0.12 percentage points from two weeks ago. 

*The Federal Reserve stopped publishing its M3 Money Supply series back in 2006. As an incomplete substitute, the M2+IMF+LTD money supply is a broader measure than M2 and consists of M2 + Institutional Money Funds + Large Time Deposits, data series which used to be included in the M3 series and which are still reported on a regular basis by the Fed.

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