Long-term Treasury yields that continue near all-time lows even as the economic numbers improve...


Long-term Treasury yields that continue near all-time lows even as the economic numbers improve and risk goes full-on in 2012? Look no further than Operation Twist, under which the Fed has purchased 91% of the government's 20-30 year debt issuance. What happens when the Fed stops? What happens to the Fed's balance sheet if rates rise?

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Comments (5)
  • wyostocks
    , contributor
    Comments (9114) | Send Message
     
    If you heard big Ben today, everything is under control and there is nothing to worry about.
    Would he understate the risks of his policies?
    You decide.
    2 Feb 2012, 12:54 PM Reply Like
  • bkpark
    , contributor
    Comments (331) | Send Message
     
    Well, FWIW, he wanted lower long term interest rates, and he is getting lower long term interest rates. Looks like the Fed policy is working so far as intended (never mind that we are historically unprecedented area for at least half a century).
    2 Feb 2012, 05:24 PM Reply Like
  • jaltergott
    , contributor
    Comment (1) | Send Message
     
    And we all know that the Fed Chief NEVER is directionally incorrect. Ask Mr Greenspan to look in the rearview mirror....
    2 Feb 2012, 09:11 PM Reply Like
  • elt10
    , contributor
    Comments (47) | Send Message
     
    "What happens to the Fed's balance sheet if rates rise?"

     

    Well, if you're long several hundred billion dollars (face) of T-Bills at really low rates, and then rates rise appreciably, you lose billions as far as portfolio value goes. If you don't need to sell your instruments before maturity (and I'm guessing the Fed doesn't) then it really doesn't matter. Draw your own conclusions...
    19 Mar 2012, 08:04 PM Reply Like
  • larrymorris
    , contributor
    Comment (1) | Send Message
     
    I continue to be amazed that there is any logic or legality to QE I/II or operation twist. How can uncle sam (treasury) issue debt from his left pocket and buy that debt from borrowed money in his right pocket.(Fed Reserve). Is Bernie Madoff running this scheme???
    20 Mar 2012, 08:19 AM Reply Like
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