Treasuries Update: Checking Up On 'Operation Twist'
By Doug Short: The Fed's latest strategy for managing the economy, Operation Twist, has two months to go. The program was announced on September 21st of last year with the stated purpose of selling $400 billion in shorter-term Treasury securities by the end of June 2012 and using the proceeds to buy longer-term Treasury securities. The Fed assumed this would put downward pressure on longer-term rates, which would stimulate the economy through "a broad easing in financial market conditions." In other words, more loans at lower rates.How effective has this strategy been? Here is a snapshot of selected yields and the 30-year fixed mortgage since the inception of Operation Twist.
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The 10-year note had been hovering around the two percent level for the past few months after hitting its historic low of 1.72 immediately following the September 21st "Twist" announcement last year. Despite the Fed's stated purpose of loweringComplete Story »