Financial plumbing under stress

The cost that financial firms pay for relatively short-term borrowings in the U.S. commercial paper market shot up sharply in the last few days.

Why it matters: This is a sign that the lenders who provide credit — the lifeblood of the financial system — are getting a bit jittery.

• The concern is that other financial firms could suffer losses as a result of fallout from Russia's invasion of Ukraine, and the sanctions imposed in response.

State of play: Many lenders have decided they want to extend credit on a much shorter term, say, just overnight rather than over a few months.

• "We have a crisis of sorts unfolding, and in a crisis, like in 2008, everyone lends at short maturities," wrote Zoltan Pozsar, an analyst at Credit Suisse, who covers these short-term credit markets.

What we're watching: Whether financial markets start to single out and stigmatize certain banks they believe may be hurt especially badly by the effects of Russia's invasion and subsequent sanctions.

The bottom line: The events of the last two weeks represent a massive shock to the global financial and economic systems. So far, the financial system has held up fairly well, but we're seeing signs of strain.