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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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From: Paul Kern	9/29/2008 2:36:05 PM
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Commercial Paper Prepares For Freeze Amid Uncertain Bailout Last update: 9/29/2008 2:34:39 PM By Anusha Shrivastava Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The failure of the U.S. government's bailout plan to gain sufficient congressional support is likely to push the commercial paper market into a deep freeze Tuesday when it reopens for active trade. That means that money market funds, which are the biggest investors in commercial paper, are likely to focus their buying on short-term U.S. Treasurys, the ultimate safe-haven. "Anything that is not a Treasury, it'll be hard to find a buyer," said Kevin Giddis, managing director and head of fixed income at Morgan Keegan in Memphis, Tenn. For commercial paper, that means there's "the possibility that it will seize up certainly exists," he said. Most of the trading in the commercial paper market is over by noon so the full impact of the bailout package not passing is likely to be felt on Tuesday.

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