M2 continues to accelerate in the most recent money supply report released by the Federal Reserve tonight.
The preliminary November 22nd measure stood at $8.809 trillion. Annualized M2 growth over the past 13 weeks was 6.4% vs. annualized growth of 5.3% and 3.1% for the past 26 and 52 weeks.
As a leading economic indicator, these numbers bode well for GDP growth (and corporate profitability growth) into the near-term future. However, these numbers are not good news for bond investors. The 30-year Treasury Bond has already fallen 6% from its October highs. Worse losses await if this trend in money supply growth continues.
At this time, most investors should avoid Treasury bond purchases and speculative investors may want to consider a short position in these securities.
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