The Daily Telegraph reports that the US Federal Reserve has pledged $200bn of emergency funding to ease liquidity problems in the markets. The move is designed to help alleviate the problems caused because of the current reluctance of banks and other financial institutions to actually lend money to each other. Creditworthy borrowers will now be able to stand in line and tap the Fed for money instead (although, in the scheme of things, $200bn is actually not a lot).

The Sunday Times reports a litany of market professionals who have now joined the chorus of those claiming recession in the US:

Ethan Harris, Chief Economist at Lehman Brothers: 'We now believe the tax-rebate cheques will arrive too late to prevent an outright recession'.

Nariman Behravesh, Chief Economist at Global Insight: 'All the lights are flashing red. We're in a recession. I don't think there is any doubt'.

Bruce Kasman, Chief Economist at JPMorgan: 'We now think the economy can be described as having entered a recession in early 2008'.

And, in the meantime, The Observer reports that the 'credit market turmoil is stretching a growing number of highly-indebted hedge funds to breaking point'. Highly-leveraged hedge funds are now said to be caught in a vicious circle. The newspaper quotes Dresdner Kleinwort's Head of Credit Strategy Willem Sels, who said: 'We are certainly of the view that forced selling at certain highly leveraged hedge funds is leading to risk being put back into the market. It is putting pressure on other hedge funds which then also run into trouble'.

Bloomberg reports that, according to two unnamed investors, Houston-based hedge fund Saracen Energy Partners lost as much as 22% of its value in February due to losing bets on the price of US natural gas. The hedge fund was said to have been worth $1.6bn at one stage last year.

The Wall Street Journal reports that executives at Carlyle Capital spent the weekend trying to get the unit's lenders to agree to a standstill agreement 'where lenders won't foreclose and liquidate the fund'. Some lenders are already believed to have sold off assets to meet margin calls. The unit's problems stem from the fact that it is highly leveraged - at around 32 times its investor funds of $670m.

The Financial Times reports that Peloton Partners has now put its plush rented offices in Soho on the market - a few days after the collapse of its $2bn ABS fund and after the firm announced it was winding down its once-$1.6bn Multi-Strategy Fund.

Bloomberg reports that banks 'struggling' to find buyers for around $131bn of unsold LBO-related loans have started to break ranks and hold separate negotiations with investors about offloading them. According to the news agency's unnamed sources, Credit Suisse, Morgan Stanley and Royal Bank of Scotland have each sold out their pieces of the $22bn LBO financing of Clear Channel Communications. Martin Fridson, the CEO of high-yield research firm FridsonVision said: 'It's reached a new stage of every man for himself. Banks worked hard until now to hold the line and keep the gentleman's agreement (that they wouldn't deal solo) together'.

Reuters reports that Intermediate Capital Group, Europe's biggest independent provider of mezzanine loans for LBOs, has had to refinance part of a $1.76bn fund in order to stave off the forced sale of assets. Managing Director Andrew Phillips said that 'we didn't want to be in a position where we were forced sellers of good assets at exactly the wrong time'.

The Wall Street Journal reports that Legg Mason confirmed Friday that it had obtained a letter of credit from an unidentified 'large bank' to provide as much as $150m to support the firm's holding in Cheyne Finance, a UK-based SIV.

Reuters reports that Andre Bergen, CEO at KBC Group, says that we'll probably have to wait until after the summer before we can safely say that the credit market turmoil is behind us. Bergen said in a recent interview with Belgian newspaper De Tijd that 'everyone is anxiously awaiting the results for the first quarter, then they will seek confirmation in the second quarter, and then it is the summer already. I fear we will only be able to speak of an eventual recovery after the holidays at the earliest'.

Finally - some good news. The Financial Times reports that London-based hedge fund manager Marshall Wace has raised some $3bn for a new fund for sophisticated investors. The firm now has around $15bn of assets under management.

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