Let’s Twist Again, Like We Did 50 Summers Ago

The Federal Reserve launched Operation Twist this week. In a nutshell, the Fed will sell $400 billion in bonds with maturities of three years or less, thereby increasing the yields of those bonds. It will then buy bonds with maturities of six to 30 years, thus decreasing their yields. (The yields for long-term bonds are higher than those for short term bonds because long-term bonds involve more risk. See the yield curve here.) The Fed...

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