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Operation Twist Is Here - Fed To Buy $400 Bilion USTs With 6 To 30 Year Maturity, To Roll MBS Maturities Into New MBS
Complete Fed Statement breakdown:
- FED SEES `SIGNIFICANT DOWNSIDE RISKS' TO ECONOMIC OUTLOOK
- FED TO BUY TREASURIES WITH 6-YEAR TO 30-YEAR REMAINING MATURITY
- FED LEAVES FEDERAL FUNDS RATE TARGET AT ZERO TO 0.25 PERCENT
- FED SAYS PROGRAM PUTS `DOWNWARD PRESSURE' ON LONG-TERM RATES
- FED TO SELL TREASURIES WITH 3-YEAR OR LESS REMAINING MATURITY
- PLOSSER, FISHER, KOCHERLAKOTA DISSENT FROM FOMC DECISION
- FED REPEATS `EXCEPTIONALLY LOW' RATES THROUGH AT LEAST MID-2013
- FED TO BUY $400B OF LONG-TERM DEBT, SELL $400B SHORT-TERM DEBT
- FED EXTENDS AVERAGE MATURITIES OF SECURITIES HOLDINGS
- FED TO REINVEST MATURING HOUSING ASSETS IN HOUSING DEBT
- FED SAYS INFLATION `APPEARS TO HAVE MODERATED'
- FED SEES `CONTINUING WEAKNESS' IN LABOR MARKET
- FED PURCHASES TO BE DISTRIBUTED ACROSS FIVE SECTORS
- FED SAYS 32% OF DEBT PURCHASES MATURE FROM 6- TO 8-YEARS
- FED SAYS 32% OF DEBT PURCHASES MATURE FROM 8- TO 10-YEARS
- FED SAYS 4% OF DEBT PURCHASES MATURE FROM 10- TO 20-YEARS
In other words: $400 billion in POMOs over the next 8 months or so, with the monthly at about $50 billion. Also MBS repurchases for a token amount. No LSAP as most expected, and no IOER rate cut. Goldman once again about half of what it expected.
And statemenet blackline:
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they did nothing
Paying themselves, thats all. And at the expense of you and me, just a hiway robbery today thats all.
What do you mean? They're not going to sell short-term securities?
Gold Man - you obviously did not go to an Ivy League college, like Ben. Besides, don't be a Debbie Downer.
You ask a wise and highly relevant question. This sets up a twin disaster scenario of weak ass short term auctions (Treasury pressure) and yield pancaking for the "edge of collapse" TBTF banks. How this doesn't end in a late this year/early next year mass bailout, I have no idea.
Riots in Cleveland and Akron...
What did LeBron do this time?
This is gonna be great for whoever gets to take a commission on said Treasuries!
Sorry - off-topic - but here's an amusing article from Bloomberg about vaults running out of space.
http://www.bloomberg.com/news/2011-09-21/bullion-vaults-running-out-of-s...
I guess no-one wants to rent all that space in the Comex vaults in case their bullion gets 'lost'!
With a President who believes our nearly 25% unemployment is a "sign of increased productivity" it's no wonder the Bernank is in charge. What a bunch of clueless ass-clowns!
If you agree with me that collapse is becoming unavoidable, don't despair, prepare! http://www.collapsenet.com/262.html
Dude, really???
A $1000.00 membership fee to read your blog? who do you think you are? Simon Black?
And silver / gold now dropping like a rock....
Are people really so goddamn stupid as to use this as the que to rush back into equities?
This really only has an effect on a small group of large, insititutional investors...hedge funds, mututal funds, and the JPM's of the world...it really does NOTHING at all for the actual economy. Right?
And...I want to know. If the FED has to sell it's short term Tbils to buy the longer term shit....who the fuck is going to buy 400 billion dollars worth of that garbage?
I don't get it either. This guy is out to print more dollars and the dollar rallies and PMs get pummeled? WTF?
The MOPE Team (management of perspective economics) at work. This is pure manipoulation to reinforce the 'Dollars are good - buy T-Bills' meme
Gold gets slammed every time there are announcements that SHOULD inspire massive buying - all this means is we're getting a government discount (and you know that the Chinese are taking every advantage of these buying opportunities - they must think that the US is run by a bunch of total idiots, more concerned with appearances than reality.... oh wait... they're right)
Not lasting long - minig stocks were down - for a few minutes - but are back almost even.
COMEX is climbing back.
I suspect the manipulators are getting low on ammo..... can't throw the same amount of cash or the same amount of cash isn't having the same effect any more. The old DROP THE MARKET - and cover the shorts after triggering the stops approach isn;t working as well anymore. I suspect the shorts are getting killed when these slams don't last as expected (bu then when you're using free government money, who cares?)
No, the Asian and Indian Physical markets knew what was coming, the bullion banks would sell the news and the Chinese would buy the gold and silver. The Pan Asian Exchange opens next month and then the ineffectiveness of the US and UK and Japanese bank interventions will become increasingly apparent as the wealth of the world is sucked up from the Western world to the East. Gold and silver are holding very well based on massive increases in physical demand from Asia.
Dropping more like a power-ball thrown down hard...what happens next?
Same 3 dissenters again this month.
Wait for the reversal.
Looks like they are rearranging the chairs on the Titanic to me.
The smart crews members are at the bar - what's the point in 'make work' whenthe ship is going down no matter what?
Gold just shit itself. :(
More whiskey (and a sandwich) sell treasuries and BTFD in gold.
Rosie will be most displeased
why gold selling ??
No inflationary outright QE. Not sure how inflationary it is to sell short term bonds to buy long term bonds.
How is the Fed supposed to keep short-term interest rates down for two more years if they're selling short-term treasuries to purchase longer-term ones?
They don't unless they have some trick up their sleeve.
Fed sells short term treasuries -> Prices down -> Yield Up. Fed buys long term treasuries -> Prices up -> Yield Down. The end result is a smaller long vs short arbitrage. In other words, there is no way in hell short term interest rates will fall.
No new stimulus (QE3)
I think its high frequency trading where the robots read every word of Bernankes speech and trade based upon it.
fuzzy programmer in C++ would have been a more suitable job for the bernank as well... and a relief to the world.
Because people are dumping everything. They are NOT selling physical gold it's just paper. BTFD!
How long do the algos stay disapointed?
3:30? at least a day?
Anyone else noticed that morgan stanley is trading at 14 bucks? Looks like its racing bac to the foggy bottom.
So now all of those people that don't qualify to refinance their mortgage at a lower rate can still NOT qualify to refi
Actually... Europe is about to take care of the next 6 months.
Fasten your seat belt. Interbank lending across the pond is in the process of freezing up.
God help us...
New normal = do the medium thing. Don't excel or lead, just do the least best idea possible. Let's teach that to young people. Let's set that example. Thanks BB for setting the mediocre example for millions of young people.
One thing's clear though: unless the FOMC brings interest rates up a gazillion basis points and suddenly starts selling its worthless assets and at the same time manages to find buyers of that worthless balance sheet, not much that comes out of Bernanke's mouth today should have a negative impact on the precious metals. At least not if one can look past the immediate action. Nevertheless, central banks tend to do what's bad for currencies and good for gold, don't they?
http://www.economicfreefall.com/2011/09/waiting-for-santa.html
Is this QE2.5 (Operation Twist) or is it QE3..?
This is one day in the time line of the struggle between a collapsing Western Banking system and the Fed's ability to expand its balance sheet to prevent it. Today, under political pressure, the Fed delayed expanding its balance sheet by shifting maturity dates and moving its balance sheet to the longer end of the spectrum.
Nothing has changed and eventually either the Fed expands its balance sheet to help US and European Banks or the system collapses entirely in my opinion.
Looks like just another round of throw the hot potato as the circle jerk continues...I guess this type of intervention would be expected when it is the only thing you have left. It's just more spackle and paint being applied to the holes to keep covering up the truth.
They're out of spackle and paint... we're down to duct tape and chewing gum
Twist is a non-event.
Where's the real story?
Guess they're going to follow up with another announcement soon enough.
Funny how some big boys announce they are offloading CLOs and structured in advance of the Fed buying MBS.
No wonder they needed 2 whole days.
Spectacular!
As we said, no QE3. No balance sheet expansion. ZH called it right on operation twist.
WS will take this as a huge disappointment. Not a disaster, though. The C-suite will have a fine, fine Christmas bonus season.
But for Main Street this means biflationary forces remain intact.
This is bullish for gold because the systemic risk is still on the table in the global system. There is still the threat of a new banking crisis and sovereign issues are here to stay. And negative real interest rates remain. As well as the threat of further dollar erosion and currency warfare.
FED TO SELL TREASURIES WITH 3-YEAR OR LESS REMAINING MATURITY
TO WHO? Who the fuck is gonna invest in zero yields with the state of the US economy?
Right, theres a big part missing to this equation, who is going to line up to buy this garbage?
Money Market Funds fleeing from European banks. Bernake will then keep expanding the swaps.
They'll force the dissenters to buy. Payback is a bitch.
I suspect there are a few entities out there desperate enough to do it. They're stuck with another worthless currency that may not last as long as their UST investment.
Who exactly is the Fed selling to?
And does this mean the the Treasury will issue longer maturity debt that the Fed will buy? In other words, how does this fuck the taxpayer if there is no balance sheet expansion?
Did anyone else catch that? S&P turned green for a split second before crashing back.
Some heavy selling in financials going on.
There is no more funny money for the banksters to make killer bonuses.
It's fucking over. SPX 400 here we come. Bernanke's place in history is set.
Fed rearranges deck chairs on Titanic, ship continues to sink.
But the band is playing a new tune.....
*collective yawn*
It's sterilized . . . no LSAP or other expansion of the Fed balance sheet (and corresponding bids in the market), so inflation is not a concern--bad for PMs.
Also, the Fed said that inflation has moderated from earlier in the year. Again, bad for PMs.
So now the Fed is working against their banker overlords. Is The Bernake trying to expedite BAC's demise?
Dont fret, the Empire is getting new military bases in Australia.................
this should prove to the masses what a huge clusterfuck we have been dealt
You know the sad part? If you explained this in simple terms to 99 out of 100 americans theyd just give a blank stare and have no idea what you ust said.
Simple-simple
Buying printed debt with more printed debt. Is there anything else anyone with a 1/2 a brain needs to now. ?
I think not !................................................
Now that it is here long term yields will go up.
................meanwhile, over in Europe. .........and if we tune into the happenin's at Moody's we see........? ...and today's reports on the economy, just like yesterday's and the day before that, etc., etc., ....gloom & doom!! .......and over at the White House the Leader of the Universe will now exude leadership with a speech on.......global warming! Etc. Blah. So net-net.........a BIG F-ING NOTHING! Useless!
This doesn't make a blind bit of difference to anything going on today. t keeps the 700tr deriviatifes bubble from blowing, maybe.
JPM, the treasury, whoever the apparatchiks were who thought this theory up - they've royally screwed the US
We can bitch about it or refinance. Or hell. "Greed is good" so let's BITCH & REFI.
PHEW! Algo's have control of the market again, until they don't, which will be sometime soon.
Gold bullish.
Common, I'm gonna sell my screwdriver and buy a hammer
And in 3 month I'm gonna twist sh*t around, how that affect
markets anyway? F*cking rates already ZERO everywhere, they
might as well charge people to keep treasuries notes and bonds.
Have no fear ! The Printing Press will save the day !
LOL
The markets are a screaming scam !
Another take on the Fed: they believe they've established credibility that they are loosey goosey, activists, and ready to open the floodgates if there's a bank failure in Timbuktu (especially Timbuktu, very sensitive ya know).
But they are starting to get religion on Biflation: monetery stimulus is no longer risk-free and they have to watch their step, keep powder dry and not print whenever the weather changes.
Which means Goldilocks and "The Great Moderation" are dead!
They probably figure that the clusterfuck going down in Euroland will be their cover when the foundatioins start to crumble in the US. "Not our fault" will be heard all over the place. Maybe they trot out one more QE before the end, but at this point they are done. Just watching the ship sink now.
Just one silly little question to ask and that is....
Where does the "Fed" get this "money" to buy this "debt" ?
OOoops,Just one more silly little question,....
Why does the Federal Govt,(really) have to sell debt to a "Fed" (not really Federal).and pay interest to this so called "Fed"
Now correct me if I am wrong....But something seems Awfully Fishy.....to me.
You missed that part where the Fed says they're selling 400 billion of debt to buy other debt.
Who are they selling to? China? That is the REAL question.
Either way, the banks are toast. GS dropping 3% and falling.
It will be a very cold winter on Wall Street and I can't help but smile!
You thought the economy was bad now?
No more funny money. Shorting gold and miners might actually be a sensible trade now.
Fed is serving a shit sandwich today. LOL.
Got FAZed?
October Market crash?
Even with this small action, there were still three dissenters. I thought the two day meeting was supposed to resolve that. It didn't. That is a sign that QE3 is not politically possible.
That said, Twist will significantly increase the interest rate risk exposure of the Fed.
Also. $400 billion of new non-Fed short-term holders of U.S. debt will increase Treasury's periodic funding requirement, versus long-term Treasuries that are rolled over every five to ten years.
And it seems that the magical DJI recovery in the last hour of trade is just beginning.
Or may be not. This isn't the best of my days.
Maria just squashed a Santelli rant >: (
Just like ZIRP annoucement: Stocks sell hard (the right reaction), Algo's grease it higher (the rigged respnose). That's why it'll take a few weeks for the market to tank 20%. Bernanke, and I've said this on this site many times, will never ever have stocks totally fall apart on his day.
Which begs the question: does Ben have the algo's ears?
Here comes the reversal. Be careful, might get one more false move and then back to your regular programming. Have not touched my mouse except for us here.
No reversal. The illusion of the allmighty FED died today. Everyone must save themselves on their very own.
So... BAC is done, JPMorgan is done. Citi is done. GS is done.
Is that it?
Set up for another round of bailouts or what?
i totally agree that gold and silver are money, also that they are going to increase in value as we see further debasement of fiat currency. But as things unravel what good will gold and silver do if they simply take it away as they have done in the past in the US? That is the only thing that would make me hesitant to hold gold. They make our currency worthless and then steal our gold. Hard to see any safe haven here. Ideas?
Are you going to give it to them? Oops, it got stolen, lost or both.
Are you going to give it to them? Oops, it got stolen, lost or both.
Are you going to give it to them? Oops, it got stolen, lost or both.
g, if it gets so bad that the police are going door-to-door looking for gold or silver, then absolutely I would want to be one of those hiding mine instead of not having any because at that point it will be the most useful.
sign on wall local Oxford assay shop...
any transaction greater than 4000.$
is required to be reported to the IRS.... by law..
buy fractional gold guys ..
long silver..
Yeah, we all get to refinance again and pump the banks and brokers with closing fees so the FRB can rotate its defaulting MBS crap for lower yielding hopefully less crappy notes, yippee!
And hey, someone has to buy Ts from the primary dealers that were told of this plan a few months ago in their impromptu meeting. The market certainly won't without a fall back buyer.
People are seeing how desperate the western banking system is.
It seems like they are putting the economy in limbo mode, bouncing between the inflation and deflation see saw. The QE3 expectation to buy MBS is still there, so I reckon stocks will rally on this over the coming weeks. This is how stupid our economy is, Bernanke doesn't have to do anything but just keep feeding the expectation to banksters and the algos take care of it after that.
I don't understand why does the Fed even have to sell short term treasuries, it invents money out of thin air, so why sell short term debt to buy longer term debt when it just magically invents the money anyway?