In the currency market, the dollar dropped lower against the euro. Late Wednesday, the euro was trading at $1.2883 vs. $1.2707 on Tuesday.  The news of the day, which brought the dollar back from its lows vs. the euro, was the FOMC’s interest rate cut of a half-point, down to 1%.

U.S. equities rallied yesterday (Tuesday) as the U.S. Federal Reserve convened for the first day of a two-day meeting of its monetary policy committee.

Despite the chaos on Wall Street, the Fed yesterday left its benchmark interest rate on hold at 2%.

Martin Hutchinson says the Fed has finally starting doing its job: putting price stability over Wall Street’s demands. Real interest rates are negative. This is feeding inflation. It also means Treasury bond yields - also currently below the rate of inflation - are too low and should begin to rise again.

Martin says investors can profit from this situation with the Rydex Juno Inverse Government Long Bond Strategy (MUTF:RYJUX).

The Federal Reserve made another quarter of a point rate cut yesterday, bringing the target Fed Funds rate down to 2%. This makes 3.25% the Fed has shaved off the rate since last summer.

Crude oil prices tumbled today following the announcement by the Federal Reserve on interest rates.

Earlier today the Federal Reserve said it would lower interest rates by a quarter percentage point.

CNN reports: “US light crude for June delivery fell $2.17 cents to settle at $113.46 a barrel on the New York Mercantile Exchange. Just before the central bank’s announcement, oil was 93 cents lower at $114.70 a barrel.

When I last commented on the bond market (December 5th’s What’s really going on with bonds), bond prices were inexplicably rallying, sending yields on ten year Treasury bonds to 4.4%.