Fiscal-2025 Q1, and the Month of December Fund-Flows

The net money-creation was lower this December than December 2023 (+$117B compared to +$178B). This was due to last December’s bank credit increase (chart below).

Compared to fiscal-2024 Q1:

• The Treasury net-transfer is $226B higher than in fiscal-2024. (Nominal-spending is $215B higher.)
• The change in bank credit is $17B lower than last year.
• The Fed’s IOR (interest on reserves) has paid $16.6B so far, which is $10B lower than last year (it was $26.4B last year).
• Total net money-creation is +$199B more than last year which continues to explain the SPX rally, but which has been decreasing during the month of December.

The average net-transfer (from the Treasury to the private sector) is decreasing according to the seasonal pattern (pink arrows inside the blue boxes). This tendency (lower net-transfer) should last until the mid-January tax-take. The SPX is likely to be in a trading-range until then.

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