US monetary conditions eased during H2 2023, reflecting the Treasury’s decision to skew debt issuance towards bills and the Fed’s December pivot. This loosening is now reversing, partly because of the recent sticky inflation scare and associated back-up in yields, and prospectively as the Treasury scales back bill financing in Q2. Continue reading

Chinese monetary statistics for January suggest that policy easing is starting to become effective. Six-month growth of narrow money, as measured by true M1*, rebounded from a negative December reading to its highest level since May. Continue reading

UK real money contraction warned of 2022 economic stagnation and 2023 recession. Weakness has abated but real money measures have yet to resume expansion, casting doubt on hopes of a sustainable economic recovery. Continue reading

Recent US equity market buoyancy is likely to be related to a rebound in broad money momentum during H2 2023. The previous post argued that this was driven by monetary financing of the federal deficit – specifically, large-scale issuance of Treasury bills that were bought mainly by money funds and banks. Continue reading

The six-month rate of change of US broad money has recovered from negative territory in early 2023 to 3.9% annualised in December – close to an average of 4.2% over 2010-19, when economic performance was generally favourable. Does this signal that the economy has adjusted to higher interest rates and monetary conditions are no longer particularly restrictive, in turn suggesting less need for Fed easing? Continue reading