Tonight's Money Supply Report

M2 growth is back on track, with a decent surge in this most recent report.

The preliminary January 17th measure stood at $8.862 trillion. Annualized M2 growth over the past 13 weeks was 5.2% vs. annualized growth of 5.1% and 3.5% for the past 26 and 52 weeks.

As mentioned last week, the Federal Reserve has fine-tuned the formula they use for arriving at their seasonally-adjusted number for M2. This renders comparables for the 13-week and 26-week periods difficult. However, what has been slowly climbing, which is unaffected by the seasonally-adjusted calculations, has been the 52-week growth of M2. At the end of October 2010, M2 growth over the past 52 weeks had been 3.0%. At the end of July 2010, M2 growth had only been 1.8% for the previous 52-week period.

It will be intriguing to see how long the Federal Reserve permits this surge in M2 to continue before they begin withdrawing some of their more stimulative measures to stabilize the economy. Treasuries have sold off significantly over the past three months. That sell-off could continue and accelerate without some reassurances from the Federal Reserve that they will not shirk their responsibility to fight future inflation.