{"id":2680,"date":"2008-12-19T11:01:02","date_gmt":"2008-12-19T11:01:02","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2680"},"modified":"2025-03-27T15:48:44","modified_gmt":"2025-03-27T15:48:44","slug":"further-us-m2-pick-up-in-latest-week","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2680","title":{"rendered":"Further US M2 pick-up in latest week"},"content":{"rendered":"<p>Weekly US money supply numbers are volatile but the latest figures support claims of a significant acceleration. M2 &ndash; currency, checkable deposits, time deposits, savings deposits and money market mutual funds &ndash; grew by an annualised 22% in the 13 weeks to 8 December, similar to the peak reached briefly in the wake of the 911 terrorist attacks &ndash; see first chart.<\/p>\n<p>The pick-up probably reflects the direct and indirect effects of the Fed&rsquo;s recent shift to more aggressive forms of &ldquo;quantitative easing&rdquo;, involving the central bank supplying credit to households and firms as well as additional liquidity to banks. <\/p>\n<p>The Fed has bought $319 billion of commercial paper since October but its plan to purchase $500 billion of agency-backed mortgage securities has yet to be implemented, suggesting a further boost to come. The latter initiative, however, has already contributed to the 30-year conventional mortgage rate plunging below its 2003 trough, resulting in a surge in refinancing applications that may partly explain the M2 pick-up (to the extent that borrowers take the opportunity to increase their loan balances). Interbank swap rates suggest a further fall in mortgage rates &ndash; second chart.<\/p>\n<p>The Fed&rsquo;s statements about quantitative easing have contained no reference to what level of monetary growth is deemed desirable under current conditions. Policy-makers are probably relying in on markets to signal that stimulus is working and may need to be reined back. However, the Fed&rsquo;s recent actions may have killed off any remaining &ldquo;bond vigilantes&rdquo;, who might be expected to provide early warning of the inflationary implications of sustained rapid monetary expansion by pushing Treasury yields higher.<\/p>\n<p>&nbsp;<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/us-money-supply-m2-new.jpg?__SQUARESPACE_CACHEVERSION=1230037595630\" alt=\"\" \/><\/span><\/span><\/p>\n<p>&nbsp;<span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/US-mortgage-swap-rates-1208.jpg?__SQUARESPACE_CACHEVERSION=1230032885265\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Weekly US money supply numbers are volatile but the latest figures support claims of a significant acceleration. M2 &ndash; currency, checkable deposits, time deposits, savings deposits and money market mutual funds &ndash; grew by an annualised 22% in the 13 weeks to 8 December, similar to the peak reached briefly in the wake of the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2680","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2680"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2680\/revisions"}],"predecessor-version":[{"id":4989,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2680\/revisions\/4989"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}