Commercial paper market showing some signs of life

A significant amount of market commentary talks about the so-called "credit crunch" as if nobody could borrow any money, but the reality is that even the commercial paper market is showing signs of life again. An article on Bloomberg by Bryan Keogh entitled "U.S. Asset-Backed Commercial Paper Expands Third Week" informs us that not only is the overall commercial paper market rising again, but even asset-backed commercial paper (ABCP) is coming back. As the article tells it:

Debt backed by mortgages, credit-card loans and other assets expanded for a third straight week, boosting optimism that the freeze in short-term credit markets that started last year may be abating.

U.S. asset-backed commercial paper outstanding rose $26.3 billion, or 3.4 percent, to a seasonally adjusted $805 billion for the week ended Jan. 16, the Federal Reserve in Washington said today. It was the second-biggest increase in at least seven years.

I follow the Fed's commercial paper report every week and had noticed the trend myself. After trending straight down since the middle of August, it was a shock to see ABCP rise up from the dead two weeks ago with not even a mention in the media.

Three consecutive weeks is still not enough to establish a durable trend, but it is quite promising.

And, it continues to confirm that the general media and even most of the financial media does a very poor job of enlightening people about the true state of the financial markets.

-- Jack Krupansky