"Financial market pressures are set to persist.  Uncertaintity over the magnitude and distribution of sub-prime related losses mean that a slow drip feed of "bad news" will continue.  Higer funding costs and tightening in lending standards rasie the possibility of the problems on Wall Street crossing over to Main Street.  The US housing downturn has further to run and may ultimatley drag down the US consumer down as well.  The focus is increasingly on the possibility of a US recession and what that might mean for the rest of the world"

To read the full report (11 pages) please click on the link below:

Economic & Financial Market Outlook 7 January 2008 (courtesy of CBA).