The Federal Reserve will purchase $44 billion of longer-maturity Treasuries and sell the same amount of shorter-term debt in October under its monetary stimulus plan that’s become known as Operation Twist.
Purchases will begin Oct. 3 with the acquisition of $2.25 billion to $2.75 billion of Treasuries maturing between February 2036 and August 2041, according to a statement today from the Federal Reserve Bank of New York, the branch of the Federal Reserve System that implements monetary policy.
The Federal Open Market Committee said last week that it would replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and counter rising risks of a recession. Treasury 30-year bonds extended gains after today’s announcement.
“The most notable part of the Fed announcement is that they are emphasizing the purchases first as evidenced by the long bond purchases followed by 10-year debt purchases,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut.
Yields on 30-year bonds fell 14 basis points, or 0.14 percentage point, to 2.91 percent at 2:31 p.m. in New York, according to Bloomberg Bond Trader prices. The 3.75 percent securities due in August 2041 increased 3 2/32, or $30.63 per $1,000 face amount, to 116 20/32.
http://www.bloomberg.com/news/2011-09-30/fed-to-buy-44-billion-of-longer-term-debt-in-october-operation-twist-plan.html
Purchases will begin Oct. 3 with the acquisition of $2.25 billion to $2.75 billion of Treasuries maturing between February 2036 and August 2041, according to a statement today from the Federal Reserve Bank of New York, the branch of the Federal Reserve System that implements monetary policy.
The Federal Open Market Committee said last week that it would replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and counter rising risks of a recession. Treasury 30-year bonds extended gains after today’s announcement.
“The most notable part of the Fed announcement is that they are emphasizing the purchases first as evidenced by the long bond purchases followed by 10-year debt purchases,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut.
Yields on 30-year bonds fell 14 basis points, or 0.14 percentage point, to 2.91 percent at 2:31 p.m. in New York, according to Bloomberg Bond Trader prices. The 3.75 percent securities due in August 2041 increased 3 2/32, or $30.63 per $1,000 face amount, to 116 20/32.
http://www.bloomberg.com/news/2011-09-30/fed-to-buy-44-billion-of-longer-term-debt-in-october-operation-twist-plan.html
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