Money markets us commercial paper market grew in latest week

← Homepage

* U.S. seasonally adjusted U.S. commercial paper grew * Not seasonally adjusted CP outstanding fell * Some analysts give more weight to data that is not adjusted * Euribor rates fall to new two-year lows By Ellen Freilich NEW YORK, May 24 U.S. seasonally adjusted commercial paper outstanding rose $14.9 billion in the week ended May 23, according to data released by the Federal Reserve on Thursday. Meanwhile, not seasonally adjusted commercial paper fell $4.6 billion in the week while not seasonally adjusted foreign bank commercial paper outstanding shrank $1.6 billion. Some analysts are putting more weight on the data that are not seasonally adjusted, however, saying the extreme events of the financial crisis make seasonally adjusted data more volatile than that without seasonal adjustments. "The unadjusted data might be more accurate than the adjusted data," said Ray Stone, managing director at Stone & McCarthy Research Associates. "Even before Lehman Brothers failed you had a plunge in commercial paper outstanding and after Lehman it became extremely acute," he said. "Seasonal adjustment factors get cranked into the history so the non-seasonally adjusted data has actually been smoother than the seasonally adjusted data, whereas usually there is more 'noise" in the non-seasonally adjusted data. "Economists are accustomed to using seasonally adjusted data, but in this case, it's better to pay more attention to the non-seasonally adjusted data when looking for the macro implications," Stone said. Overseas, key euro zone three-month bank-to-bank lending rates fell to new two-year lows as the European Central Bank's long-term funding operations supplied the financial system with ample liquidity. The sharp fall in interbank rates over the last few months has brought benchmark euro-priced three-month rates to within striking distance of the euro-era low of 0.634 percent hit in early 2010. The ECB, which kept euro zone interest rates at 1.0 percent again this month, has put more than 1 trillion euros of three-year funds into the banking system since the end of last year, and interbank rates have fallen by half since. Three-month Euribor rates fell to 0.677 percent from 0.680 percent on Wednesday. The equivalent Libor rate, compiled from London-based banks, also slipped, falling to a 13-month low of 0.60436 percent.