The commercial paper market contracted sharply in the past week, marking the steepest decline since the severe tightening that occurred last summer.
Total outstanding commercial paper declined by $45.8 billion, to $1.72 trillion, for the week ended Wednesday, according to the Federal Reserve.
This comes one week after the market’s largest weekly jump in two months.
Declines were recorded by all three major categories. Sales by financial issuers fell by $19.2 billion, to $741.3 billion, its lowest level in several months. Sales of asset-backed paper fell by $8.4 billion, to $771.2 billion. Finally, sales by nonfinancial issuers dropped by $18.4 billion, to $205.4 billion.
The total commercial paper market is down from $1.82 trillion about four months ago and the peak of $2.2 trillion during the summer of 2007.