Market this week

The problems in the mortgage and corporate lending sectors continued to be the primary driver of market sentiment last week. Thursday's announcement that BNP Paribas (one of Europe's largest banks) was suspending the operations of three hedge funds, all of which are invested in the U.S. subprime market, caused many investors to fear that the problem is getting more wide spread than originally anticipated. As you can see from the charts below, volatility levels remain high and we believe this may cause the markets to continue trading in a choppy manner until investors get a better idea of how the credit problems will affect the longer-term direction.