The Fed released the new Operation Twist schedule for February. The Fed plans to purchase $45 billion and sell approximately $43 billion in Treasury securities during February. Use this link below or simply use the 'POMO Pumps' link in the right margin to reference the dates of sales and purchases moving forward.
http://www.newyorkfed.org/markets/tot_operation_schedule.html
Have you found any correlation between the Operation Twist day or time versus the equities? It seems that when liquidity is being withdrawn, markets tend to tank. Maybe I am generalizing..Love to hear your point of view.
ReplyDeleteHello Curiousmind, that is an excellent question, glad you are using your noggin. Keystone has studied the Operation Twist actions and cannot find a reliable signal to hang your hat on.
ReplyDeleteThe reason the link in the right margin is called 'POMO Pumps' is because of QE1 and QE2 where the operations bounced the equities markets like clockwork between 10 AM and 11 AM EST each schedule day. This action created an edge in trading since it was highly reliable.
Operation Twist is a different animal since purchases and sales are both occurring. Other factors are occurring as well now such as Europe's woes and additional Fed measures ongoing. A correlation is seen in the January trades with the bullish days but January was wall to wall bullish so it is unwise to draw a conclusion, especially with the additional market movers occurring. Life was simpler with QE1 and QE2 occurring by their lonesome.
So the short answer is no. Keystone wanted to graphically show the correlation but considering the above ideas, there is nothing reliable to offer currently. As a general rule, however, the operations typically occur between 10 AM and 11 AM so the idea is to avoid these times while trading, or, consider the timing to be typically bullish, so entering longs is probably best before 10 AM and if shorting simply wait until after 11 AM which may provide a slight edge. All in all, there is nothing of much use for trading here.