More “Operation Twist” from the Fed

Posted By on June 20, 2012

Of course … it is also an election year. Hmm?
How much will the market move when Federal Reserve Chairman Bernanke speaks this afternoon?

Operation Twist, in which the central bank sells short-term securities and buys the same amount of longer-term debt to lengthen the average maturity of its holdings and keep borrowing costs low, is set to expire this month. The difference in yield between two- and 30-year securities was 249 basis points. It has narrowed from 304 basis points on Sept. 20, the day before the central bank announced the plan.“No one can say with any degree of certainty what the Fed might do,” said Christopher Sullivan, who oversees $1.9 billion as chief investment officer at United Nations Federal Credit Union in New York. “Given the pace of growth in the U.S. and the failure of the U.S. economy to generate sufficient jobs to bring down the unemployment rate and inflation easing, one might feel the Fed is obligated to do more. But growth is continuing in a modest way, and the risk of contagion in Europe has eased some, so the Fed might hold some policy in reserve against a further flair up later down the road.”

LINK

Comments

  • Markets moved down as Bernanke expressed concern over the economy. Perhaps disappointment in both the economy comments and Fed policies?

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.