The commercial paper market showed significant signs of stabilising on Thursday, suggesting short-term investors that have driven a dramatic shrinkage in the market may have largely completed their exit from commercial paper backed by mortgages and other assets.

Fresh data from the Federal Reserve showed the pace of contraction in commercial paper slowed in the past week, as the market shrank $8.2bn to $1,917bn. The fall was concentrated in asset-backed commercial paper while other types of commercial paper saw some growth.