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Commercial paper rises $35.8 billion to hint U.S. economy is growing | The Commercial Finance Blog

Commercial paper rises $35.8 billion to hint U.S. economy is growing

by LJ Miehe on August 20, 2009

Editor’s Note: This is a good sign for now.  In the article they mention that inventory levels have been drawn down and this may be the signal that companies are restocking and that is part of the incease in commercial paper activity.   We will have to continue to watch this development almong others to see if this is a lasting change or just a blip.

News (Reuters):

The U.S. commercial paper market expanded in the latest week, suggesting the economy may be growing again after the longest recession in decades as the two-year-old global credit crisis slowly eases, analysts said.

It was only the second time since April that the overall size of the market had expanded on a weekly basis; the first time being earlier this month.

For the week ended Aug. 19, the size of the U.S. commercial paper market, a vital source of short-term funding for routine operations at many companies, rose by $35.8 billion, the biggest jump in at least four months, to $1.111 trillion outstanding, from $1.075 trillion the previous week, Federal Reserve data showed on Thursday.

In two years of credit market turmoil, the market’s size has halved, from about $2.2 trillion outstanding in August 2007 when the crisis first erupted.

Now, however, “it appears that the freefall we saw in commercial paper may be ending,” said Ray Stone, an economist with Stone & McCarthy Research Associates in Princeton, New Jersey.

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