Saturday, 16 March 2013

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

U.S. Money, Credit and Treasuries Review as of 6 March 2013
The broad measures of money supply in the U.S. continued to expand rapidly on last year for the bi-weekly period ending 6 March 2013. However, all the broad measures of money supply and bank credit declined compared to two weeks ago. M2+IMF+LTD* is now 0.50% lower than the all-time high set on 9 January this year while M2 and bank credit are 0.77% and 0.14% lower. 

The M2 money supply was up 6.56% on the same period last year while the M2+IMF+LTD* money supply increased 5.54%. For the last six bi-weekly periods the latter has increased at the fastest pace since the middle of 2009, even though it declined by 0.27% compared to two weeks ago.

Bank Credit contracted 0.14% on two weeks ago and expanded 4.06% on the same period last year. This however remains lower than the 6% increase during the summer of last year (and at the end of December). All money supply values and bank credit are close to their all-time highs.

The 1-Year and 10-Year U.S. treasury yields remain of course extremely low in a historical perspective. Compared to one year ago the 1-Year treasury yield is down 0.02 percentage points (from 0.18% to 0.16%) and was unchanged from two weeks ago. The 10-Year treasury yield decreased by 0.07 percentage points compared to same period last year and decreased 0.10 percentage points compared to two weeks ago. The spread between the 10-Year and the 1-Year treasury yield is currently 1.75 percentage points, which is a slight decline from one year ago and 0.10 percentage point lower than 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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