Debut 'Twist' Purchases Fire Up Treasurys
After weeks of market anticipation, the Federal Reserve on Monday began implementing "Operation Twist," the plan to shift its Treasury holdings into longer-term U.S. debt.</br></br>The central bank bought $2.5 billion in Treasury bonds with maturation dates of between 25 years and 30 years from its network of 20 primary dealers, which trade directly with the Fed. Dealers submitted offers to sell bonds with a face value of roughly $7.5 billion. The Fed decided which offers to buy based on its models of fair prices.</br></br>But some market observers said relatively few bondholders lined up to sell their Treasurys, a sign than many may believe prices have room to rally.</br></br>"The offer of only $7.5 billion dollars into the Fed bid demonstrates that people aren't ready to take their profits yet from the big run-up in September," said Jim Vogel, interest-rate strategist at FTN Financial</br></br>In recent months, Treasury prices have risen on expectations that the Fed would undertake another round of bond buying. During the third-quarter, the benchmark 10-year note's yield, which moves in the opposite direction of price, tumbled 1.23 percentage points. Yields on the 30-year Treasury note fell even further, dropping 1.46 percentage points.