From Zero Hedge this morning….some key quotes from Art Cashin…
As to “Operation Twist” – two key take-aways concerned mortgages and operational problems. The Fed will now reinvest maturing MBS payouts in new MBS purchases. They had been using the MBS dough to buy treasuries. By shifting mortgage payouts back into mortgages (and also targeting the 10 year Treasury) suggests the Fed is going “all in” to cut mortgages and dislodge a frozen real estate market. It would also put the Fed in a good spot to help facilitate a major government sponsored re-financing initiative (rumored for weeks). When Republicans awaken to this, expect a good deal of pushback on the “helping the re-election” mode.
- Fed’s “Operation Twist” Decision Paves Way for Massive Fannie Mae Freddie Mac Refinancing Plan – Bruce Krasting (johnmurphyreports.com)
- Fed Watch: FOMC Reaction – The Extended Version (economistsview.typepad.com)