What’s Operation Twist?
Fed decides on $400 billion bond swap (Operation Twist)
WASHINGTON (MarketWatch) The Federal Reserve on Wednesday, acting in the face of a weak economic outlook, decided to start a program to twist the yield curve by swapping shorter-maturity government securities for longer-dated ones.
In a statement, the Fed will buy $400 billion of Treasury securities in the 6-30 year range and sell an equal amount of maturities of 3 years or less.
The Fed also announced a new plan to purchase agency mortgage-backed securities with proceeds of maturing securities.