Let's Do the Twist

 
The Federal Reserve announced "Operation Twist" Wednesday, a widely expected stimulus move reviving a policy from the 1960's. The policy involves selling $400 billion in short-term Treasuries in exchange for the same amount of longer-term bonds, starting in October and ending in June 2012. The move it is designed to lower yields on long-term bonds, while keeping short-term rates little changed.

 So, there is no cavalry coming to the rescue.  No extraordinary measures were taken, no rabbits were pulled out of any hats.  On top of that the Fed's language was far blunter than it had previously been discussing deceleration of the economy, possibly risks of an economic slowdown, the weak job market, and depressed housing market. The long-only, fully-invested contingent was hoping for much much more, they were disappointed, which led to the sell-off over the past few days.