Today's FOMC meeting has adjourned with an announcement of another quarter point rate cut by Mr. Bernanke and friends. This was the most popular move with analysts and market participants, but as expected, the markets have reacted strongly. Stocks have dropped considerably while bonds have rallied since the announcement. The Dow currently stands down 177 points from yesterday's closing level while the Nasdaq has fallen 35 points. The bond market is now up 42/32, which will likely improve this afternoon's mortgage rates by approximately .25 of a discount point over this morning's rates.

This was the third consecutive meeting with a rate cut, which will mean immediately lowered credit card and home equity loan rates for consumers and cheaper borrowing costs for corporate borrowers. In the post-meeting statement, the Fed indicated that more rates cuts may be needed to prevent the economy from slipping into a recession, but also hinted that inflation still a concern. Still, bonds are rallying hard while stocks are falling. I think this afternoon's bond strength is partly being fueled by the stock weakness than directly by the Fed's rate cut or statement.