What’s wrong with commercial paper?

The credit crunch isn’t over and it’s the commercial paper sector that’s prolonging the misery. John Stepek finds out exactly what the problem is.

Is the credit crunch over?

Far from it. Equity markets have rallied a little since mid-August. This rebound was fuelled partly by the Federal Reserve making it cheaper for banks to secure emergency funding by cutting its discount rate (which, despite the name, is usually 1% above the base rate) from 6.25% to 5.75%. As a result, investors are more confident that the Fed will be forced to cut US interest rates as early as its next meeting on 18 September.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.