Operation Twist – unmet goal, for now

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The Fed announced Operation Twist on September 21, 2011 with the objective of driving long rates to a lower level. How have they fared so far?

“The 10-year Treasury Note yield closed at a low of 1.72% on the day after the new policy was instituted. As of this writing, it is trading at 2.33%. The 30-year mortgage rate dropped briefly to 3.94% but is back up at levels seen just prior to the announcement (4.10%),” said Asha Bangalore of The Northern Trust  Company.

In short, the 10-year Treasury Note yield has moved up and the 30-year mortgage rate is holding at a level seen before Operation Twist was announced, indicating a relatively unsuccessful Operation Twist, for now.

Source: Northern Trust – Daily Economic Commentary, October 28, 2011.

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