Monday, 15 April 2013

U.S. Money, Credit & Treasuries Review (as of 3 April 2013)

U.S. Money, Credit and Treasuries Review as of 3 April 2013
Both M2 money supply and bank credit hit new all-time highs for the bi-weekly period ending 3 April. At USD 10.5687 trillion, the M2 increased 0.32% from two weeks ago and expanded 7.06% compared to same period last year. Bank Credit outstanding was USD 10.0049 trillion, up 0.28% on two weeks ago and up 4.07% compared to the same period last year (YoY). MZM and M2+IMF+LTD* both remain slightly lower than the all-time highs from 9 January this year. 

The growth rates for M2, MZM and Bank Credit appear to be slowing down:
  • Their current YoY growth rates were all lower than their trailing 52 week averages
  • The most recent average two and six weeks growth rates are all lower than their trailing 52 week averages
The current growth rate for M2+IMF+LTD, including the most recent two and six week average growth rates, is on the other hand growing significantly quicker than than the 52 week average.

The longer term growth trends (12 month moving average YoY growth) for M2, M2+IMF+LTD and Bank Credit is still heading upwards. In fact, the current long term growth rate in M2 of 8.13% is the highest ever reported. 

The 1- and 10-Year Treasury Yields remain at historically low levels and both were lower than one year ago (by 4 and 23 basis points, respectively). The current spread between the two is 186 basis points, which is 40 basis points higher than the average since 1984 and 19 basis points lower than one year 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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