Operation Twist Is Here - Fed To Buy $400 Bilion USTs With 6 To 30 Year Maturity, To Roll MBS Maturities Into New MBS

Tyler Durden's picture

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 09/21/2011 - 14:37 | 1693519 tekhneek
tekhneek's picture

do the twist, bitchez!

Wed, 09/21/2011 - 14:40 | 1693529 andybev01
andybev01's picture

...like we did last summer, and the summer before that.

Wed, 09/21/2011 - 14:46 | 1693604 rcintc
rcintc's picture

Horay!! We're Saved! All is Well!
Just in case....buy Silver and Gold!

Wed, 09/21/2011 - 14:50 | 1693664 wombats
wombats's picture

Why is the Gold price falling now....and Silver going up?  I do not understand.

Can someone explain why this is happening???

Wed, 09/21/2011 - 14:53 | 1693710 healey
healey's picture

Well I think gold is falling because there was no cut to the IOER. Cutting that would have been likely inflationary. Gold is an inflation hedge.

Wed, 09/21/2011 - 14:53 | 1693713 tekhneek
tekhneek's picture

Free market?


Wed, 09/21/2011 - 14:57 | 1693752 wombats
wombats's picture

That was helpful.  Thank You.

Wed, 09/21/2011 - 14:59 | 1693778 Slash
Slash's picture

I don't understand wtf this is going to do. Are long term rates really a problem? Are slightly lower rates really going to entice people to buy over priced homes? I doubt it....


This is for something else right? How will this benefit the banks/treasury? Are there lots of long term treasury auctions coming up that need monetizing?

Wed, 09/21/2011 - 15:02 | 1693813 DoChenRollingBearing
DoChenRollingBearing's picture

Slash, I think you are on it: this will essentially do NOTHING.

Wed, 09/21/2011 - 15:16 | 1693911 Slash
Slash's picture

Not to mention it's basically steralized purchases too isn't it? Selling $400 billion back into the market (taking liquidity out), while printing up $400 billion to monetize longer term trashuries. Won't this also squeeze profits of the banks that are playing the yield curve? How does this help anyone except maybe to fund the government for a couple more months?


Also, as we saw with QE 2, despite the fed buying, rates actually rose slightly (check the charts). This is b/c the market was tricked into bidding up risk assets and moved money out of bonds and into stocks/commodities. Can we expect a repeat of this? I'm short trashuries right now (although hedged now) in anticipation of market participants ultimately moving back into stocks/commodities.

Wed, 09/21/2011 - 15:17 | 1693921 BDig
BDig's picture

With this move, they're trying to keep the banks solvent, not trying to get people to buy homes.  Banks balance sheets are dripping with mortgages, so dropping interest rates is simply a mechanism to keep existing home values stable near the top and therefore BAC - Countrywide solvent.

The value of a home is inversely correlated with interest rates, just like the price of bonds.  That is, if you increase rates, the value of the bond will fall.  So they're just trying to prop up home values with this move.  It's not to entice new borrowers - not directly anyway.

Wed, 09/21/2011 - 15:23 | 1693965 Slash
Slash's picture

oh I see....well not necessarily the value of homes, but the value of the morgage on that home right?. If that mortgage was created at 6% and rates drop, those mortgages are more valuable. So really it's a play to make all the toxic assets slightly less toxic....temporarily......probably trying to entice suckers to get the securitization process going again.

Wed, 09/21/2011 - 15:18 | 1693924 BDig
BDig's picture


Wed, 09/21/2011 - 16:01 | 1694178 arizona11912
arizona11912's picture

I think there's enough stupid people out there that will "buy the dip" of interest rates for homes for a short period of time. Then once the FED sells the short term bonds the treasury may "bundle" them and make them longer term bonds. Not sure if it’s feasible but I don’t see why it couldn’t be done that way. What do you guys think? Thanks...

Wed, 09/21/2011 - 15:00 | 1693799 tekhneek
tekhneek's picture

That was a joke.

As discussed here, regardless of the Fed's announcement it was in the plan to hammer the prices at 2:15pm to avoid the sudden knee-jerk reaction to the upside.

A lot of speculative traders have no idea what this announcement means, combine that with a planned attack of the prices and you have a short term sell-off which is what was wanted.

This is probably one of the few remaining opportunities to get gold at this price, and you should seriously consider buying in my opinion.

Wed, 09/21/2011 - 15:04 | 1693831 DoChenRollingBearing
DoChenRollingBearing's picture


tekhneek is right.

Physical gold is very cheap.  TPTB are giving us a gift.  Take it!

Wed, 09/21/2011 - 16:00 | 1694048 Ag Tex
Ag Tex's picture

Currency printed out of thin air to eventually acquire MBS.  This is a short-term smoke screen.  The end game is for the Fed to gradually acquire mortgages and become landlord over all its new tennants.   The Founding Fathers issued warnings of such things.  Get gold and silver while you can or become serfs.

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."  Thomas Jefferson
Wed, 09/21/2011 - 14:58 | 1693767 Panafrican Funk...
Panafrican Funktron Robot's picture

The US dollar price of gold is subject to the availability of US dollars.  This announcement was a mild disappointment regarding the increase in the availability of US dollars, ergo the continued relatively tight range for gold.  If you trade virtual/paper gold, selling OTM puts and/or NTM/ATM covered calls in your Gold ETF of choice is a good way to play this in the interim while we wait for late October/early November.  

Wed, 09/21/2011 - 15:00 | 1693770 DoChenRollingBearing
DoChenRollingBearing's picture

@ wombat

Perhaps because there is no obvious QE3 to drive investors to gold.  But, be calm, the future od gold and silver ix excellent, perhaps better than ever.

The best blog for gold TRADING is Turd's:



These machinations do NOTHING to hurt gold and silver, if anything, as we see more manipulation the bull case for gold gets STRONGER.

Wed, 09/21/2011 - 14:54 | 1693709 cnsteph
cnsteph's picture

Never mind... Wombat asked the same quesition.

Wed, 09/21/2011 - 14:55 | 1693733 tekhneek
tekhneek's picture





Wed, 09/21/2011 - 14:58 | 1693766 gmrpeabody
gmrpeabody's picture

No big QE3, market knee jerk is to sell gold off. After they have time to think about it..., they will start adding back to their positions. BTFD is all you need for now.

Wed, 09/21/2011 - 15:17 | 1693773 Spirit Of Truth
Spirit Of Truth's picture

Wow!....they should put Benny on the cover of Time magazine! I mean this miracle worker is god! Everything is fixed now!  Greece is solvent....the European banks are recapitalized....unemployment is cured....the wave of foreclosures has ended and the housing market is fully rebounding.

This whole Fed thing is just a wonder to behold. These central banks can manage the world economy far better than individuals.  Who needs free markets when these mathematical wizards can run the show so well?


When oh when will these arrogant schmucks receive their pink slips (and arrest warrants).

Wed, 09/21/2011 - 14:59 | 1693775 UBIGDummy
UBIGDummy's picture

so is this qe2.5, 3.0, 2.6, 2.7, 2.8?

I m sooo confused? Isnt they just doing an exchange and not actually injecting money into banks. Sell Old/expiring shit, and trade it in for long term useless shit? Is the printing press adding to the M3 or not?

Can someone explain in dummy english for me?

Wed, 09/21/2011 - 15:17 | 1693923 AbelCatalyst
AbelCatalyst's picture

no extra money - just shifting and reinvesting some interest.  What we're seeing is a divided FED and a divided kingdom can't stand....  The Bernak is already out on a thin branch by himself, now three members are no longer supporting him...  He's almost totally alone and the FED has become part of the political process - no more stimulating, no more printing: hello deflation...  Lower stock market, lower house prices, lower interest rates, lower demand, lower everything...  Don't be surprised to see the greeback (USD Index) make a run at $85 or $90... Then, or course, it all comes to a head and reverses and gold hits $15K an ounce!!    

Wed, 09/21/2011 - 14:51 | 1693671 Ethics Gradient
Ethics Gradient's picture

No. I'm not a huge fan of doom mongering - so Dog knows why I read this site. The difference here is that now it's different.

The bullets they used last time wont work this time.

Last time we bought the idea of nationalised banks. What will be accept this time?

Wed, 09/21/2011 - 14:42 | 1693551 OOONONO
OOONONO's picture

did it already - now what? 

Wed, 09/21/2011 - 14:52 | 1693680 strannick
strannick's picture

Now fiddle with it while America burns

Wed, 09/21/2011 - 15:18 | 1693929 OOONONO
OOONONO's picture

what if "it" got squished?

Wed, 09/21/2011 - 14:43 | 1693562 chet
chet's picture

But QE it ain't.

Wed, 09/21/2011 - 14:46 | 1693613 Fox Moulder
Fox Moulder's picture

Twistin' in the wind.

Wed, 09/21/2011 - 16:59 | 1694440 covert
covert's picture

govt cooking the books. when will it end? how much @&*^ can you eat?



Wed, 09/21/2011 - 14:37 | 1693520 Little John
Little John's picture

New York Times 9/21/2015

 “They only gave me the job because they knew I couldn’t do it”                                                    

    In an exclusive NYT interview former Federal Reserve Chairman, Ben Bernanke, related          that he is convinced he was appointed only because he was “ a clueless academic stooge . 


     Mr Bernanke, who now works as CFO/fry cook at Ponzi’s Pizzaria in Polookaville, was          quoted as saying “ I mean, come on, they knew  the economy was a sinking ship with no hope for recovery yet they recruited me out of Princeton and got me to take over as Captain of the Titanic. They knew I had no experience with real world.  I told them during the  interview I didn’t have a clue about anything other than Keynesian dogma.  They said that was exactly what they were looking for.  Now everyone blames this mess on me.  They only gave me the job because they knew I couldn’t do it. Hey I was a victim too”.       

Wed, 09/21/2011 - 14:46 | 1693609 OOONONO
OOONONO's picture

Pfffftttt!   Like the NYT will still be around in 4 years - sheesh, where u from?

Wed, 09/21/2011 - 14:47 | 1693626 Clueless Economist
Clueless Economist's picture

I hope that bearded creep Krugman will be waiting tables in 2015 at Ponzi's Pizzeria also

Wed, 09/21/2011 - 14:55 | 1693735 Little John
Little John's picture

They told him if he took the job he stood to make a lot of dough in the future.

Wed, 09/21/2011 - 14:48 | 1693630 Dan Watie
Dan Watie's picture

Perhaps he can get his old job back at South of The Border.

Wed, 09/21/2011 - 15:07 | 1693858 Spirit Of Truth
Spirit Of Truth's picture

Don't you mean "book cook"?

Wed, 09/21/2011 - 14:39 | 1693521 tekhneek
tekhneek's picture


Wed, 09/21/2011 - 14:40 | 1693524 Let them eat iPads
Let them eat iPads's picture

Aaaaand, markets plummet.

Wed, 09/21/2011 - 14:42 | 1693558 Grand Vizier
Grand Vizier's picture

Plummet?  Really? 

Wed, 09/21/2011 - 14:57 | 1693761 Waffen
Waffen's picture

I am afraid not.  The manipulators are winning.

No Overt QE..markets continue to levitate.. Metals flatline..

This continues for how long?

Wed, 09/21/2011 - 14:40 | 1693525 jdelano
jdelano's picture



tylers:  many

jdelano: 1

Wed, 09/21/2011 - 14:54 | 1693725 Dan Watie
Dan Watie's picture

<--- one

<--- many


How many Tyler Durdens are there?

Wed, 09/21/2011 - 14:39 | 1693526 Waffen
Waffen's picture

What a disapointing pile of shit.

I guess we will be stuck in LIMBO another 6months, year or more.

Wed, 09/21/2011 - 14:49 | 1693642 Cash_is_Trash
Cash_is_Trash's picture

LIMBO is the new normal.

Going nowhere fast!

Wed, 09/21/2011 - 15:13 | 1693891 Moe Howard
Moe Howard's picture

You can't get there from here.

Wed, 09/21/2011 - 14:49 | 1693646 Wooly
Wooly's picture


My immediate thoughts were.. "is that it?"

Wheres the shock and awe?

Wed, 09/21/2011 - 14:40 | 1693527 HpDeskjet
HpDeskjet's picture

So, that's disappointing for some ppl i guess

Wed, 09/21/2011 - 14:40 | 1693528 SofaPapa
SofaPapa's picture

The S&P never even considered going positive on the announcement.  Doesn't look like "shock and awe"...

Do NOT follow this link or you will be banned from the site!