Editor’s Note: This is an important statistic to watch, if the U.S. economy is really seeing recovery, we should see steady increases in the commercial paper market. That would show that businesses are needing more short-term funding for operation like increasing production and payroll and that would show up in increases of issuance of commercial paper. It is important to watch the “plumbing” of our financial markets to see if the media and analysts are in-line with what is actually happening in the capital markets which drive growth.
Reuters - The U.S. commercial paper market contracted for the first week since early February, suggesting a lingering impact from the global credit crisis, Federal Reserve data showed on Thursday.
For the week ended March 3, the size of the U.S. commercial paper market, a vital source of short-term funding for companies’ day-to-day operations, fell by $20.4 billion to $1.134 trillion outstanding, from $1.154 trillion outstanding the previous week.
“The levels are weak, and this suggests that short-term business activity is simply not picking up,” said Kathleen Stephansen, chief economist at Aladdin Capital Holdings in Stamford, Connecticut.
“It suggests that shorter-term credit is still hard to get, and if businesses can’t get financing, they can’t expand,” she said. Asset-backed commercial paper outstanding fell by $500 million after a decline of $2.8 billion the previous week.
Unsecured financial issuance fell by $23.3 billion after rising $24.8 billion the previous week.
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