I thought it would be useful to look at the very short-term (three minute) intraday charts of the US Dollar Index, 10-year Treasury Note future, S&P 500 future, and the Gold future, given the Fed’s emergency action:

“The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.

The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”

(Aside: I’m not thrilled with a lot of their language: “in view of a weakening of the economic outlook” … of a, of the — bureaucrats love prepositional phrases; “incoming information,” sounds lame; do contractions deepen? do markets soften? They need someone who can write clear, concise English. Greenspan did so much damage with his intentionally convoluted Greenspeak — maybe his true legacy?)

Click to enlarge (US Dollar Index)

The dollar was already trending lower into the Fed cut, but weakened quite a bit more on the news which makes sense.

Click to enlarge (10-year Treasury Note future)

The T-Note dropped initially on the news but then stabilized, holding onto its gains.

Click to enlarge (S&P 500 Index future)

The S&P popped on the news, traded lower for a brutal stop grab (those pit guys are the nastiest in the world) below the “news bar” low, then traded back up and formed a stable range.

Click to enlarge (Gold future)

Gold also popped (predictably) on the news and went back up to the Lucky 888 range.

A few comments from Billionaire Gross:

“It’s a sad testament to think the Fed has to cut interest rates eight days in front of a meeting to salvage the equity markets … The U.S. economy is in a rather sad state of affairs in that it depends on housing and stock prices to keep going … We need a fed funds level at 2.5 percent to 3 percent. The sooner the better … You would have to think the Treasury rally is almost over. It’s a safety-only type of vehicle. It certainly doesn’t provide an attractive return.'’