NEW YORK, Jan 29 (Reuters) - The U.S. commercial paper market, the main artery of short-term funding for U.S. companies, is showing some signs of life after three months of total dependency on the Federal Reserve. Commercial paper held by the Fed declined by about $103 billion to $247 billion in the latest week. About $67 billion was reinvested in the Fed's commercial paper funding facility.The Fed's balance sheet liabilities -- a rough gauge of the central bank's exposure to the cash-starved financial system -- shrank in the latest week as the first slew of about $170 billion that the Fed bought to support the markets came due.
This was the first time since October that investors and the Fed could gauge the state of the fragile commercial paper market. "It's a sign of a gradual reduction of reliance on the Fed facility," said Michael Feroli, economist at JPMorgan in New York.