Sunday, 28 April 2013

U.S. Money, Credit & Treasuries Review (as of 17 April 2013)

The U.S. money supply continues to grow significantly on a year on year (YoY) basis according to the latest numbers released by the Federal Reserve. M1 money supply expanded by 10.81% on last year while M2 and M2+IMF+LTD* increased 6.74% and 5.72% respectively. M1 and M2 YoY growth rates are now however  lower than the 52 week moving averages. The broader measure of the money supply, the M2+IMF+LTD, is on the other hand growing substantially quicker than its 52 week moving average.

The monetary base for the week increased 13.76% on same period last year and has now increased 13.31%, or USD 358.3 billion, this year alone. 

Bank Credit growth has slowed down in recent weeks with the YoY growth rate, currently at 3.97%, falling below 4% this week for the first time since January 2012. 

The 1 and 10-year treasury yields declined further this week compared to same period last year and both yields were lower than two weeks ago. The current spread between the two yields is 164 basis points which is 18 basis points higher than the long term average of 146 basis points.

*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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