Monetary Policy Report submitted to the Congress on February 27, 2008, pursuant to section 2B of the Federal Reserve Act

Figure of commercial paper, 2005-08. Data are plotted as curves in two panels--the top panel for spreads and the bottom panel for outstandings. In the top panel, the spread on AA-rated asset-backed commercial paper starts in 2005 at around zero basis points. The spread on A2/P2-rated nonfinancial commercial paper begins in 2005 at around 20 basis points. Both spreads stay almost constant, with minor fluctuations, until late summer of 2007, when they widen to about 100 basis points. They then narrow sharply; in October 2007, AA-rated asset-backed reaches around 30 basis points, and A2/P2-rated nonfinancial reaches around 70 basis points. At the end of 2007, both spreads spike to almost 150 basis points. At the start of 2008, AA-rated asset-backed decreases to around 30 basis points, and A2/P2-rated nonfinancial decreases to around 50 basis points. In the bottom panel, asset-backed outstandings start at around $650 billion in early 2005 and rise steadily through early August 2007, when they reach nearly $1,200 billion. They then decline sharply, reaching around $750 billion at the end of 2007. At the start of 2008, they rise slightly through January to around $800 billion, and they tick down through February. Unsecured nonfinancial outstandings begin at around $120 billion in early 2005 and fluctuate moderately through early December of 2006 in a narrow range of about $110 billion to $140 billion. In mid-December of 2006, they rise to around $160 billion and remain at roughly this elevated level, with moderate fluctuations, through February 2008.

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