Based on current macro regime conditions and m2 money supply's historical behaviour in similar regimes, the model projects 23,848.59 by 2026-12-31 ( +5.1% from 22,686 today). The 68% confidence range is 23,403.26 to 24,293.93; the wider 95% range is 22,975.74 to 24,721.45. Methodology below the headline.
M2 Money Supply Forecast 2026
Quantitative analysis from 298 observations of M2 Money Supply history, joined to four universal macro regime classifications. Numbers are computed, not narrated.
Performance by Window[02]
| WINDOW | N | ANN RET | ANN VOL | RET/VOL | HIT % | TOTAL |
|---|---|---|---|---|---|---|
| 1Y | 13 | 4.58% | 0.63% | 7.25 | 100.0% | 4.58% |
| 3Y | 36 | 3.09% | 0.73% | 4.21 | 82.9% | 9.27% |
| 5Y | 61 | 2.68% | 1.66% | 1.62 | 70.0% | 14.15% |
| 10Y | 121 | 6.01% | 3.00% | 2.00 | 85.0% | 79.17% |
| All | 298 | 6.15% | 2.15% | 2.86 | 90.6% | 337.95% |
Annualized total return = (1 + total)^(1/years) - 1. Ret/Vol is the annualized return divided by annualized volatility (Sharpe-equivalent without risk-free subtraction). Hit % = pct of single periods that were positive.
Where We Are Now[03]
Forward Returns by Macro Regime[04]
How M2 Money Supply has performed historically conditional on the prevailing macro regime. The current bucket is highlighted; +1Y averages drive the headline signal above.
| REGIME BUCKET | N | +30D | +90D | +1Y AVG | +1Y MED | HIT % |
|---|---|---|---|---|---|---|
| Low (<15) | 65 | 0.42% | 1.71% | 6.22% | 5.45% | 100.0% |
| Normal (15-25) | 90 | 0.46% | 1.86% | 6.04% | 6.33% | 94.0% |
| Elevated (25-40) | 32 | 0.49% | 1.83% | 5.41% | 6.80% | 81.3% |
| Extreme (>40) | 3 | n/a | n/a | n/a | n/a | n/a |
| REGIME BUCKET | N | +30D | +90D | +1Y AVG | +1Y MED | HIT % |
|---|---|---|---|---|---|---|
| Inverted (<0bps) | 27 | 0.08% | 0.50% | 2.48% | 3.41% | 77.8% |
| Flat (0-100bps) | 62 | 0.54% | 2.01% | 7.61% | 5.66% | 91.1% |
| Steep (>100bps) | 100 | 0.55% | 2.09% | 6.10% | 6.36% | 100.0% |
| REGIME BUCKET | N | +30D | +90D | +1Y AVG | +1Y MED | HIT % |
|---|---|---|---|---|---|---|
| Tight (<350bps) | 24 | 0.43% | 1.63% | 3.67% | 3.99% | 94.7% |
| Normal (350-500bps) | 45 | 0.29% | 1.26% | 6.17% | 4.08% | 81.4% |
| Stressed (>500bps) | 18 | 0.81% | 2.54% | 7.20% | 6.33% | 88.9% |
| REGIME BUCKET | N | +30D | +90D | +1Y AVG | +1Y MED | HIT % |
|---|---|---|---|---|---|---|
| Weak (bottom tercile) | 34 | 0.63% | 2.68% | 7.72% | 7.69% | 100.0% |
| Neutral (middle) | 38 | 0.49% | 1.81% | 5.20% | 5.81% | 97.1% |
| Strong (top tercile) | 77 | 0.40% | 1.52% | 5.91% | 5.29% | 86.7% |
Forward returns are forward-looking from each historical observation in the bucket; +252d corresponds to one trading year. Buckets with fewer than 5 forward-return observations are reported as n/a. These are conditional historical averages, not forecasts.
Lead-Lag Relationships[05]
For each universally-recognised leading indicator, the lag at which the daily-return correlation peaks. Positive lag means the anchor leads M2 Money Supply; negative means it lags.
| ANCHOR | ROLE | PEAK LAG | PEAK CORR | ZERO-LAG | RELATIONSHIP |
|---|---|---|---|---|---|
| Initial Jobless Claims | Labor leader | 0d | 0.618 | 0.618 | coincident |
| HY OAS Spread | Credit risk leader | +1d | 0.389 | 0.330 | coincident |
| 10Y-2Y Yield Spread | Recession leader | -28d | -0.347 | 0.046 | lags target by 28d |
| Baa-10Y Spread | Credit risk (slow) | +1d | 0.330 | 0.283 | coincident |
| 10Y Treasury Yield | Discount-rate driver | +1d | -0.283 | -0.239 | coincident |
| VIX | Volatility leader | +1d | 0.223 | 0.158 | coincident |
| U-Mich Consumer Sentiment | Survey leader | 0d | -0.212 | -0.212 | coincident |
| Trade-Weighted Dollar | FX driver | +1d | 0.191 | 0.122 | coincident |
| Copper | Global growth proxy | -59d | 0.186 | -0.080 | lags target by 59d |
| NFCI | Financial conditions | +12d | 0.164 | -0.006 | leads target by 12d |
Pearson correlation of daily returns over up to 25 years of overlapping history, searched across a ±60-day lag grid. Indicators classified as “weak” don't have meaningful predictive power at daily resolution; many of these (yield curve, NFCI, sentiment) lead at monthly/quarterly horizons instead.
Historical Analogs[06]
Periods where M2 Money Supply sat at a similar percentile rank to today, with what happened over the next 30 / 90 / 252 trading days. Analogs are clustered to avoid double-counting nearby dates.
| DATE | VALUE | +30D | +90D | +1Y |
|---|---|---|---|---|
| Feb 1, 2025 | 21613.2000 | 0.37% | 1.51% | 4.69% |
| Nov 1, 2024 | 21451.6000 | 0.16% | 1.13% | 3.85% |
| Dec 1, 2022 | 21290.9000 | -0.05% | -2.49% | -2.41% |
| Sep 1, 2022 | 21536.7000 | -0.35% | -1.19% | -3.66% |
| Jun 1, 2022 | 21651.5000 | 0.01% | -0.88% | -3.94% |
Worst Historical Drawdown[07]
Largest Single-Period Moves[09]
- Apr 1, 20206.44%
- May 1, 20205.08%
- Mar 1, 20203.48%
- Dec 1, 20082.21%
- Sep 1, 20012.12%
- Mar 1, 2023-1.39%
- Apr 1, 2023-0.89%
- Dec 1, 2022-0.54%
- Sep 1, 2022-0.47%
- Sep 1, 2003-0.45%
Calendar-Month Seasonality[10]
Average single-period return aggregated by the calendar month in which the period ended.
| MONTH | AVG RETURN | HIT % | N |
|---|---|---|---|
| January | 0.48% | 92.0% | 25 |
| February | 0.53% | 96.0% | 25 |
| March | 0.47% | 88.0% | 25 |
| April | 0.63% | 87.5% | 24 |
| May | 0.68% | 95.8% | 24 |
| June | 0.39% | 91.7% | 24 |
| July | 0.48% | 96.0% | 25 |
| August | 0.53% | 88.0% | 25 |
| September | 0.43% | 84.0% | 25 |
| October | 0.46% | 84.0% | 25 |
| November | 0.46% | 96.0% | 25 |
| December | 0.49% | 88.0% | 25 |
N = 298 OBS · GENERATED 2026-05-18 09:30Z
Forecast Approach
regime implied: The current macro regime classification (Goldilocks, Reflation, Stagflation, or Deflation) dictates the expected direction and magnitude of movement, calibrated against historical regime performance.
Key Drivers & Risks
- •Fed balance sheet
- •Bank reserves
- •Treasury General Account
- •Reverse repo facility
Historical Volatility
Low: trends are persistent, reversals are policy-driven
How M2 Money Supply Forecasts Have Held Up Historically
M2 money supply forecasts have a moderate track record because M2 grows roughly with nominal GDP plus monetary-policy adjustments. The 2020-2021 surge (M2 grew 27% in 12 months on COVID stimulus, the largest in modern history) was missed by every forecaster; the 2022-2023 contraction (first negative-Y/Y M2 since 1937) was equally missed.
Regime-conditional models on M2SL achieve approximately 70% directional accuracy. The M2 growth rate is more useful than the absolute level; sub-5% growth historically signals tight liquidity, above-10% signals loose liquidity.
Regime Sensitivity for M2SL
M2 growth is the broadest liquidity regime variable. Goldilocks regimes anchor M2 growth in 5-8% range; stagflation regimes can suppress it below 4%; deflation regimes (2008-09, 2022-23) can push it negative.
The April 2026 setup has M2 at $22.7T, growing at roughly 4-5% Y/Y after the 2022-2023 contraction. The regime conditional reads as moderately constructive: M2 growth has resumed but at a sub-trend pace consistent with the Fed's restrictive-policy stance. Acceleration toward 7%+ would flag policy easing impact; deceleration below 3% would flag tightening transmission.
What Drives M2SL Forecast Errors
Three structural issues drive M2SL forecast errors. First, the velocity of M2 (GDP/M2 ratio) is not constant. The 2020-2021 surge in M2 didn't immediately translate to inflation because velocity dropped sharply; the 2022-2024 inflation came as velocity rebounded. Models that use a constant velocity assumption mis-estimate inflation transmission.
Second, M2 includes savings deposits and small time deposits, which shift in and out of higher-yielding alternatives (MMF, T-bills) based on rate differentials. The 2022-2023 deposit outflows from regional banks toward MMFs depressed M2 mechanically without reducing total liquidity.
Third, the M2 measure excludes certain categories (institutional MMFs, large time deposits) that have grown significantly. The narrower M2 series under-represents true broad-money creation in 2024-2026.
How to Use This Forecast in Practice
For M2, the Y/Y growth rate is more informative than the absolute level. Growth above 7% historically supports nominal asset prices through liquidity provision; growth below 3% historically pressures risk multiples through liquidity withdrawal.
The cleanest cross-check is the M2-velocity-of-money relationship. When M2 growth accelerates while velocity stays low, inflation impact is delayed; when both rise together, inflation transmission is rapid. The 68% band on M2 forecasts should be treated as moderately tight because the policy-determined path moves slowly.
Frequently Asked Questions
What factors could push M2 Money Supply higher?▾
The primary drivers that tend to lift M2 Money Supply depend on the current macro regime. Financial conditions indexes are the Fed's dashboard. The Chicago Fed's NFCI blends over 100 inputs spanning equity volatility, credit spreads, funding stress, and leverage. Real yields across the TIPS curve reveal the true cost of capital after inflation, while liquidity measures (reverse repo, TGA, reserves) show whether the system is flush or stressed. Together they form the transmission belt from policy rate to real economy. Convex tracks these drivers live across the Liquidity category and flags when multiple forces align in the same direction. See the "Key Drivers & Risks" section on this page for the current list, and check the regime dashboard for how the macro backdrop is currently tilted.
What factors could push M2 Money Supply lower?▾
The same transmission channels that drive M2 Money Supply higher operate in reverse when conditions flip. The risk drivers listed above map directly to scenarios that, if triggered, would pull this metric in the opposite direction. Convex aggregates these into a scenario-weighted probability distribution rather than a point forecast, so the magnitude depends on which scenarios activate.
Where does consensus see M2 Money Supply heading?▾
Rather than publish a point target that goes stale the day after release, Convex assembles consensus from the macro regime classification, active scenario probabilities, and historical base rates. Point forecasts from banks and strategists are worth reading for context, but they typically cluster around the consensus and miss the tail events that actually move markets. The scenario-weighted approach here captures that tail risk explicitly.
What is the historical range for M2 Money Supply?▾
Historical ranges for M2 Money Supply vary dramatically by regime. A level that is extreme in Goldilocks can be routine in Stagflation, and vice versa. The Historical Volatility section on this page describes the typical range and regime-specific behavior. For the full multi-decade history, visit the M2 Money Supply chart page, which includes selectable time ranges up to five years and downloadable data.
How often is the M2 Money Supply forecast updated?▾
This forecast page recalculates whenever the underlying data or regime classification changes, typically within hours of new data releases. The scenario probabilities refresh daily as the macro state is regenerated. Specific drivers listed on this page reflect the current state of the Convex regime engine, not static historical assumptions.
Is this forecast actionable for trading?▾
Convex forecasts are informational and educational. They describe probability distributions and regime-conditional paths rather than specific entry and exit levels. Traders and portfolio managers use them alongside other inputs including position sizing rules, risk management, and their own conviction calibration. They are not investment advice.
Get forecast updates for M2 Money Supply and related indicators.
Forecasts are model-based projections derived from current regime classification, scenario probabilities, and historical patterns. They are not investment advice. All investments involve risk.