Commercial Paper PlungingJanuary 06, 2014
Commercial paper peaked at just under $2.2 trillion in 2007 before the wheels came off the shadow banking system. It is currently just over $950 billion, and still falling, almost seven years later. If present trends persist, the amount of outstanding commercial paper will make a new low in the weeks to come. The shadow banking system is still clearly contracting, and this represents an interesting contrast to the pervasive bullishness on the economy.
The pace of the contraction in commercial paper over the last five years is only exceeded by the May-August 2011 period….which was a difficult stretch for stocks.