{"id":2960,"date":"2010-03-16T09:20:53","date_gmt":"2010-03-16T09:20:53","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2960"},"modified":"2025-03-27T15:49:00","modified_gmt":"2025-03-27T15:49:00","slug":"us-recovery-underpinned-by-corporate-liquidity-revival","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2960","title":{"rendered":"US recovery underpinned by corporate liquidity revival"},"content":{"rendered":"

Prior posts have argued that weak broad money trends in the US and Europe are not an obstacle to a continuing economic recovery because corporate liquidity is rising solidly, supporting prospects for business investment and hiring. Firms have been able to raise cash levels because of a fall in the demand to hold money by households and financial institutions, mainly reflecting negative real interest rates.<\/p>\n

This hypothesis received further support from US fourth-quarter flow of funds accounts data<\/a> released last week. A broad money measure comprising currency, banking system deposits, money market mutual funds, repurchase agreements and foreign deposits was unchanged in the year to end-December but this stability concealed a rise of 8.5% in business holdings offset by falls of 1.9% and 3.0% respectively in household and financial money – see first chart. Business liquidity grew at a 15.0% annualised rate during the second half.<\/p>\n

The decline in household and financial money implies that there is less “sideline cash” available to flow into markets and push up prices. Expressed as a proportion of financial assets, however, money holdings are still at a “normal” level by recent historical standards – second chart. Investors may wish to rebalance their portfolios further away from cash in response to the negative real interest rate “tax” imposed by central banks.<\/p>\n

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Prior posts have argued that weak broad money trends in the US and Europe are not an obstacle to a continuing economic recovery because corporate liquidity is rising solidly, supporting prospects for business investment and hiring. Firms have been able to raise cash levels because of a fall in the demand to hold money by […]<\/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-2960","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\/2960","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=2960"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2960\/revisions"}],"predecessor-version":[{"id":5269,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2960\/revisions\/5269"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}