Commercial paper outstanding for the week fell by a sharp $47.5b and totals $1.15 trillion, the lowest since at least Nov ’00 that data is out and down from the record high of $2.22 trillion in July ’07. The decline was led by a $44.3b decline in nonfinancial CP to $108.7b, a 29% drop from the prior week, by far the biggest drop since ’00. While the decline reflects in part the sluggish economy as short term funding needs continue to shrink due to the lack of compelling investment opportunities, there has been a continual push on the part of corporate CFO’s of industrial co’s to push out the term of funding and thus be less subject to the vagaries of the short term CP market. Financial company CP, which makes up most of the overall CP market, saw a gain of $18.2b to $564b, a 7 week high, and is a cheap source of funding for banks with a steep yield curve. Asset backed CP continued its big decline, falling by $21.3b.

Peter Boockvar

Managing Director

Equity Strategist

Miller Tabak + Co.

Office: 212-370-0346

Category: MacroNotes

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