Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  Fed Actively Twists But Holds Off on QE3
Posted Under: Research Reports
Today the Federal Reserve announced major changes to the composition of its balance sheet as well as major changes to its description of the economy.

From now through the middle of next year, the Fed will sell $400 billion of Treasury securities with maturities of three years or less and purchase $400 billion in Treasury securities with maturities of six years to thirty years.  This is an "active" form of "twisting" the maturities in its balance sheet in an attempt to bring down long-term interest rates.  It is more aggressive than the "passive" alternative in which the Fed would roll some of its maturing short-term Treasury securities into longer-term Treasury debt.  It is unclear at this point whether the Fed will employ the passive approach in addition to the active twist of $400 billion.
The Fed also announced that it will cease shifting its portfolio of mortgage backed securities (MBS) and the debt of Fannie Mae and Freddie Mac (GSE debt) into Treasury securities.  Since mid-2010, the Fed has reduced its holdings of these residential mortgage-based assets by about $300 billion, to $1 trillion from $1.3 trillion, buying Treasury securities with the principal as MBS and GSE debt matured.  Now the Fed will use the principal to buy MBS.  The Fed did not provide a date for that process to end.  In other words, going forward and for the foreseeable future the Fed will maintain a stable amount of Treasury securities and a stable amount of mortgage-based assets...
Click here to view the entire commentary.
Posted on Wednesday, September 21, 2011 @ 9:13 PM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2023 All rights reserved.