Embark on Operation Twist!

So, the Fed has announced that we are engaging in the lethal Operation Twist!  Umm, what?

This is The Fed’s newest adventure into confusing the public into thinking it is naturally stimulating and relieving downward economic pressures, but actually amounts to just tweaking the yield curve.  CNBC has this cool explanation on yield curves for those who are not lame/nerdy enough to really know how that works…check it out…

Also, for those who cannot remain awake long enough to read through the dirty details of how this new fed policy works…essentially the fed will purchase in the time-span of a year, $400 billion of Treasury securities with maturities of 6 years to 30 years and sell an equal amount of Treasury securities with maturities of 3 years or less.   What will this do, you ask?  Well, we ask the same question, because it mostly will just make that yield curve thingy look kind of different.

Anyways, the market has vomited all over this announcement as per usual, closing down 282 points for the day…

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: