Sunday, 2 February 2014

U.S. Money, Credit & Treasuries Review (as of 22 January 2014)

Based on the most recent data published by the Federal Reserve, the tables below present some key developments in U.S. monetary statistics for the bi-weekly period ending 22 January 2014 (31 January for treasury yields):

The monetary base increased to USD 3.7734 trillion for the bi-weekly period ending 22 January 2014, an increase of 36.59% on the same week last year. The Fed announced in December last year that it would buy USD 75 billion in longer term treasury securities and agency mortgage-backed securities this month. This week it announced purchases would be reduced to USD 65 billion in February.

The M1 money supply plummeted 5.88% on two weeks ago, but increased 8.07% compared to the same week last year. The year on year (YoY) growth rate is continuing heading downwards.

The YoY growth rate in the M2 money supply increased during the last two weeks, from 4.87% to 5.50%, to record the highest growth rate since the bi-weekly period ending 11 December last year. Bank credit growth continues to be extremely low in a historical perspective growing just 1.35% on last year. As with the M1, both M2 and bank credit growth continue to slide. The relatively low growth in bank credit is contributing to the reduced growth in M1 and M2 money supply growth.

The 1-year treasury yield was unchanged from two weeks ago while the 10-year yield declined 12 basis points. The 10-year yield has now declined 25 basis points since 27 December last year which appears to have been driven by turmoils in emerging markets such as Argentina.