Tuesday, September 20, 2011

Hint of operation "twist".


Well there are rumours in the market that Fed is likely to start off with a moderate "twist”, using just the first year's approximate $140B roll-off from its balance sheet to reinvest in longer-dated Treasurys, likely in the 5-year to 10-year range. The 30-year bond is leading Monday's rally, up 3 3/32 in price to drag yields down more than 15bps to 3.188% after briefly hitting a new 2011 low of 3.174%.

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