Russian a question | TigerDroppings.com
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joshnorris14
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Florida
Member since Jan 2009
21470 posts

Russian a question

With the FOMC meeting coming up and the ending of Operation Twist, do you see Bernanke announcing an extension of it? Will it be changed at all?


LSURussian
LSU Fan
Member since Feb 2005
85143 posts

re: Russian a question
quote:

With the FOMC meeting coming up and the ending of Operation Twist, do you see Bernanke announcing an extension of it?
No. The Fed has nearly zero short-term securities left in its portfolio which it can sell to offset the long-term security purchases. So it can't continue to do what it's been doing in Operation Twist.

quote:

Will it be changed at all?
Op Twist will expire. I expect the FMOC to announce it will continue to buy mortgage-backed securities of approx. $40 billion a month, which it has already said it would do. Those purchases will be almost offset by maturing securities and interest payments received so the monetary base will be relatively steady.


GumboPot
LSU Fan
Saints Fan
Member since Mar 2009
27115 posts

re: Russian a question
With the end of Operations Twist do you expect long term rates to return back to their historical relative spread to short term rates? In other words do you expect the yield curve to "un-flatten"?

If so, I can see upward pressure on mortgage rates, thus this and next month might be the last time to get your lowest mortgage or refi in.
This post was edited on 12/5 at 7:41 am


LSURussian
LSU Fan
Member since Feb 2005
85143 posts

re: Russian a question
quote:

In other words do you expect the yield curve to "un-flatten"?
Not soon....maybe by the end of 2013. With the Fed continuing to buy the LT mortgage-backed securities each month, I anticipate LT rates will remain artificially low for a while longer.



GumboPot
LSU Fan
Saints Fan
Member since Mar 2009
27115 posts

re: Russian a question


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LSURussian
LSU Fan
Member since Feb 2005
85143 posts

re: Russian a question
Now we have the answer. Op Twist is no more but the Fed will increase its buying program from the current $40 billion a month of mortgage-backed securities to include an additional $45 billion/month of longer term Treasury securities.

Rates to remain low until unemployment goes below 6.5%


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