On Tuesday, the Bank of Canada will announce whether they find it necessary to cut interest rates by 25bp to 4.25 percent, as downside risks to growth continue to mount and credit markets remain tight.

Professional system trader Art Collins shares his daily biases in the index, bonds and currency futures markets for December 3.

James Mound reviews futures and commodities in his weekly report for the week of December 3.

This week John Mauldin takes a look at problems at the edge of the economy which threaten to derail not only the recent robust growth (at least in the statistics) but also the markets.

Toni Hansen is watching for a slightly higher high in the S&Ps and Dow on the weekly time frame to continue to create the conditions that would be favorable for a stronger price reversal and correction into the early half of 2008.

Banks typically borrow short and lend long. But when short rates are so high, how can they make any money lending for long-term mortgages? They can’t. So they stop lending. And without ready mortgage credit, buyers stop buying houses. And when buyers stop buying houses, house prices fall.

It appears that evidence is pointing in favor of a reduction in the federal funds rate, and the FX, bond, and equity markets will likely continue to reflect that if ISM manufacturing is released in line with or worse than expectations.

Heading into next week, Toni Hansen expects the market's upside action to resume, but on a much more muted scale than on Wednesday.

The 10-year note already yields less than 4%. Bonds have been falling since June. They are just another of the many signs of deflation – of a draining away of credit, cash, liquidity – from the markets. Now the Fed is no longer driving inflation; it is trailing along behind deflation, trying to keep up with it.

It would not be surprising to see the USD/CAD pair fall down towards 0.9500 in coming days. However, Canadian economic data may limit losses as GDP for the third quarter is expected to slow, giving the Bank of Canada reason to consider cutting rates next week.