Chart Advisor: M2 Money Supply Turns Higher

By Manuel Tellechea, CMT

1/ M2 Money Supply Turns Higher

2/ MSTR Consolidates Within Range

3/ UK 30Y Gilt Yields Hit Multi-Decade Resistance Zone

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💵 M2 Money Supply Turns Higher, Reinforcing Risk-On Regime

The M2 it’s the total amount of liquid money in the U.S. economy.

• Cash in circulation
• Checking deposits
• Savings accounts
• Retail money market funds

When M2 grows, there’s more money sloshing around, more fuel for spending, investing, and inflating.

As a broad measure of money supply, it reflects the Federal Reserve’s policy impact and liquidity conditions, which are critical following yesterday’s ECB decision. Its influence on inflation expectations and asset prices (e.g., stocks, gold) makes it a key indicator for investors assessing the U.S. economic outlook amidst global uncertainties.

The rebound in M2 provides a macro tailwind that supports risk-taking behavior:

• Increased liquidity and potential for looser financial conditions.
• Easing pressures on credit markets.
• Possibility of a Fed pivot or pause gaining traction.

Higher M2 levels typically correlate with increased liquidity, benefiting equities (e.g., Nasdaq, S&P 500) but raising inflation risks, as seen in the 2021-2022 period.

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📈 MSTR Consolidates Within Range as Bitcoin Correlation Remains Strong 

MicroStrategy (MSTR), widely known for its substantial Bitcoin holdings, is currently consolidating within a well-defined sideways range between $310 and $570, following a powerful breakout from the $130 area in mid-2023.

Strategy now owns 597,325 Bitcoin. At a current price of around $110,000, the total value of MSTR’s Bitcoin is about $65 Billion. But MSTR trades at a market cap of $116 billion, nearly double the fair value of its Bitcoin holdings.

MSTR has outperformed Bitcoin on a relative basis since mid-2023. The ratio remains above the breakout base (~0.0035), confirming that MSTR is gaining strength vs. BTC during this phase.

MSTR remains in a healthy consolidation phase following its explosive breakout. With strong correlation to Bitcoin and persistent relative outperformance, the stock continues to act as a high-beta Bitcoin proxy. A breakout above $570 could trigger a fresh leg higher, while $310 remains the key support level to watch.

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📈 UK 30Y Gilt Yields Hit Multi-Decade Resistance Zone

The yield on the UK 30-year government bond has surged to around 5.2%, reaching levels not seen since 1998–2000. This marks a profound regime shift after nearly four decades of declining long-term interest rates, culminating in record lows near 0.5% following the pandemic.

The current yield spike, which began in 2022, reflects the UK’s rapid inflationary pressures, fiscal expansion, and monetary tightening. Structurally, this breaks the 40-year downtrend, suggesting that the secular era of ever-lower long bond yields may have ended.

The Bank of England’s stance, with fewer expected rate cuts (two 25bps reductions forecasted for 2025), has kept yields elevated. The ECB’s decision on July 3, 2025, may influence global30-year bond markets, including UK gilts.

The Labour government’s £297 billion bond issuance plan for this fiscal year, the second-highest on record, has raised concerns about debt sustainability, pushing yields higher.

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Originally posted 4th July 2025