NEW YORK-(Dow Jones)- The U.S commercial paper market fell on both a seasonally adjusted basis and an unadjusted basis in the week ending March 17, according to Federal Reserve data released Thursday.
No clear pattern of growth or contraction has surfaced in recent weeks in this short-term market, making it difficult to use it as barometer for the economy. Even so, this market, used by companies to finance day-to-day needs, has recovered after freezing during the financial turmoil in recent years. It had to be supported by the Fed through a program to lend to issuers that were unable to tap investors for cash directly.
Later Thursday, the central bank will release data on how much it holds in its Commercial Paper Funding Facility, or CPFF. When the program was launched, it held $350 billion. That number has dwindled to less than $3 billion now.
The Fed charged penalty rates to get companies to interact directly with investors. The CPFF expired Feb. 1.
This week, on a seasonally adjusted basis, the commercial market, tapped by companies to finance inventory and salaries, fell by $22.4 billion, after gaining $11.2 billion the week before. On an unadjusted basis, this week's decline stands at $28.3 billion, after a decline of $600 million in the week prior.
Industry participants say the unadjusted numbers are more representative of what is going on in the market, adding they are unsure what method the Fed uses to calculate the seasonally adjusted data. On its Web site, the Fed says the calculations are made "using the Bell Labs seasonal-adjustment method."
This week, the asset-backed segment of the market fell by $3.8 billion, after declining by $4.5 billion last week, on a seasonally adjusted basis.
On an unadjusted basis, the asset-backed portion fell by $11.1 billion this week, after falling by $4.5 billion last week.
Overall, the market is now $1.122 trillion in size on a seasonally adjusted basis, substantially down from a peak of $2.2 trillion in July 2007. On an unadjusted basis, the market stands at $1.086 trillion.
Copyright 2009 Dow Jones Newswires
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