M2 Passes $8.8 Trillion, Non Seasonally Adjusted M2 Surges By $57 Billion In Prior Week

Seasonally adjusted M2 has just surpassed $8.8 trillion for the first time, hitting a record $8,802.2 billion, a jump of $16 billion on a SA basis. This is the 17th out of 18 consecutive weeks that M2 has increased. On a non-seasonally adjusted basis, M2 also jumped to a record high, hitting $8,765 billion, a jump of $56.9 billion W/W, and an increase if just over $100 billion in the past two weeks alone.
Seasonally Adjusted M2:

Non-Seasonally Adjusted M2:

While the jump itself is not surprising as it comes in anticipation, and realization, of QE2 (we would love to have the semantic and highly theoretical debate of whether or not the Fed "prints money" but will focus on the practical for now), the last week's components of the M2 change were odd to say the least. In the past week we saw both the biggest drop in commercial banks savings deposits in 2010 ($61.3 billion) and the biggest jump in demand deposits ($57.6 billion).
Whether or not this is due to the recently adopted unlimited guarantee by the FDIC on demand deposits is unclear, however as the chart below shows this is certainly a very odd move, and is indicative that there has been a notable readjustment in the bank deposit base. The surge in demand deposits brings the total to $536.2 billion, an increase of $94 billion from the beginning of the year. And despits the drop, savings deposits are also markedly higher compared to the start of the year: at $4,336.7 billion, $337.8 billion higher than at the end of 2009. Whether this is a pull driven transfer, as banks need to replenish their deposit basis is also unknown. We will keep a close eye on this, as such a major reallocation of bank deposit liquidity has not occured in over a year.