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

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tekhneek's picture

do the twist, bitchez!

andybev01's picture

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

rcintc's picture

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

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???

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.

wombats's picture

That was helpful.  Thank You.

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?

DoChenRollingBearing's picture

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

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.

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.

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.

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...

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.

DoChenRollingBearing's picture

Green

tekhneek is right.

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

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
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.  

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:

tfmetalsreport.com

EDIT:

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

cnsteph's picture

Never mind... Wombat asked the same quesition.

tekhneek's picture

Buy.

The.

Fucking.

Dip.

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.

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?

/SARCASM

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

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?

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!!    

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?

OOONONO's picture

did it already - now what? 

strannick's picture

Now fiddle with it while America burns

OOONONO's picture

what if "it" got squished?

covert's picture

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

http://covert3.wordpress.com

 

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”.       

OOONONO's picture

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

Clueless Economist's picture

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

Little John's picture

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

Dan Watie's picture

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

Let them eat iPads's picture

Aaaaand, markets plummet.

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?

jdelano's picture

scoreboard:

 

tylers:  many

jdelano: 1

Dan Watie's picture

<--- one

<--- many

 

How many Tyler Durdens are there?

Waffen's picture

What a disapointing pile of shit.

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

Cash_is_Trash's picture

LIMBO is the new normal.

Going nowhere fast!

Moe Howard's picture

You can't get there from here.

Wooly's picture

Agreed.

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

Wheres the shock and awe?

HpDeskjet's picture

So, that's disappointing for some ppl i guess

SofaPapa's picture

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