3:00PM EST: As widely expected, the Federal Reserve announced this afternoon that they will be leaving interest rates unchanged. The Fed Funds rate will remain at 5.50% and the Discount rate at 5.00%. The 30-Year Bond broke slightly back into positive territory following the announcement. The Dow Jones Industrial Average (DJIA) slid on the news. At 3:00pm est the 30-Year Bond was up +6/32 to yield 6.13%, while the DJIA was down nearly 100 points.

11:00AM EST: Bond prices have slipped slightly into negative territory as the stock market pares some of its earlier losses. There is no clear reason for this reversal at this time. Trepidation in front of the conclusion of today's FOMC meeting may be having an impact as Central bankers in both Britain and Germany recently raised interest rates despite the turmoil in the equity markets world-wide.

10:30AM EST: Bonds are up and Stocks are down in early trading following further declines in foreign markets (Hong Kong -4.0%, Nikkei -2.7%). There is nothing on the Economic Calendar today, leaving only the stock market and the Federal Open Market Committee (FOMC) meeting as the highlights for the market. The FOMC meeting started at 9:00am et today, with an announcement coming around 2:15 ET.

Tomorrow we get the release of 3rd quarter productivity, Initial Jobless Claims, the Atlanta Fed Index, the minutes of the September FOMC meeting and a scheduled speech by Alan Greenspan on Asian Markets. Friday's releases on the October Producer Price Index (PPI) and Retail Sales will be closely watched. (See the calendar for details).

If there was any remaining possibility of Fed tightening, it was pretty much extinguished by last night's declines in foreign markets. Policy makers will talk about the upside risks on inflation given economic strength, but in the end, they will not have the nerve to tighten in the face of tenuous equity market conditions around the globe.

According to a survey by Dow Jones Newswires, economists at 37 of the 38 primary dealers in the U.S. are predicting no change in interest rates.

However, some observers added that absent the precarious state of Asian economies and volatile stock markets, Friday's strong wage and payroll figures would have clinched the case for a rate increase at the Fed meeting.

Analysts warned that if, as expected, the Federal Reserve leaves interest rates alone, the market will be left at prices that don't reflect the potential inflationary pressures of a surging economy and tight labor markets. In addition to the high payroll figure Friday, the Labor Department also reported that average hourly earnings rose 0.5% in October.

The Treasury Market was closed yesterday in observance of Veterans Day.

On Monday, in a dull trading session, Treasuries ended little changed with slight losses at the front of the curve and small gains at the long end. The market's performance was actually quite impressive given that the equity market instability which prevented a rout after the employment report did not continue....