Tag: operation twist

Operation Twist – What is it all about

Operation Twist – What is it all about

Economic Indicators
Operation Twist is a federal reserve monetary policy involving buying and selling of bonds in an effort to push down the interest rates on mid term and long term interest rates. In Operation Twist, the Federal reserve sells the short term or mid term treasury bonds and uses the cash to buy the long term treasury bonds thus generating demands and reducing the interest rates. In bond markets, when there is a demand for bonds the interest rates are low and vice versa. The term Operation Twist was named after the Chubby Checker song and was first tired in the 60's. The name comes due to the graphical representation it has on the yield curve. A typical yield curve has a linear upward sloping yield. The Operation Twist's actions aims to twist the end of the yield curve which gave rise to ...