The M2 money volume rose in December to $ 21.5 trillion, just shy for its highest time.
M2 money amount measures the total amount in circulation within an economy, including both liquid and less liquid assets. Meanwhile, the CPI index traces the average price change of goods and services over time, indicating inflation.
Continued growth in the M2 money amount is a bullish indicator of risk assets as it indicates that more liquidity is getting into the system, which is typically in risk mode first.
The M2 money amount has the clock in a new monthly high every month since January 2024. M2 money affects CPI by affecting inflation trends. While the Federal Reserve is actively tightened through quantitative easing and keeping the bolds at an elevated level while trying to bring CPI back to its 2% inflation target, M2 money continues to grow.
