US M2 Money Supply Reaches Historic High of $23.155 Trillion
The US M2 money supply has risen to a historic high of $23.155 trillion.
In June, seasonally adjusted M2 reached $23,155.2 billion, an increase of $9.96 billion from May.
Liquidity expansion drives the purchase of risk assets, with funds flowing into stocks and cryptocurrencies, benefiting growth stocks and gold, while bonds are under pressure.
Source: Public Information
ABAB AI Insight
From 2020 to 2022, the US M2 surged from about $15.4 trillion to a peak of $21.7 trillion, with an annual growth rate reaching 27%. Subsequently, due to interest rate hikes and quantitative tightening, it experienced the first sustained year-on-year negative growth since 1959, hitting a low of -4.7%.
The current expansion mainly comes from the return of bank deposits and retail money market funds, combined with the residual effects of past quantitative easing and the recovery of bank credit, with funds re-entering the broad money supply rather than directly from a new round of large-scale asset purchases.
Similar to the path after the quantitative easing cycle post-2008 and the stimulus after the 2020 pandemic, we are currently in a re-expansion phase following the end of quantitative tightening, with industry positioning shifting from contraction to moderate liquidity release.
Essentially, this represents a transfer of pricing power, where the mechanism is that the rebound in money supply growth prioritizes the elevation of financial asset valuations, giving relative advantages to holders of risk assets, while those holding fixed income and cash are under pressure.
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