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title: Institutions Eye Fed
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[TRACE Turns 20](https://articles.marketsmedia.com/trace-turns-20)

 09.22.2011

 By Markets Media

 Institution

# Institutions Eye Fed

 09.22.2011 By Markets Media

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The Federal Reserve today announced what many called “operation twist” on its current method of quantitative easing.

 The U.S. Dollar got a boost as Ben Bernanke said that rates will remain unchanged until 2013. He also mentioned that the Fed would be buying $400 long-term maturity debt, selling $400 billion of short-term maturity debt and will reinvest capital accrued from maturing mortgage debt into mortgage-backed securities, effectively buoying home loan securitizations.

 News of continuing Permanent Open Market Operations (POMO) that the Federal Reserve conducts will no doubt bring delight to the ears of institutions and other large asset managers. Buyside firms with large amounts of capital are able to effectively purchase Treasuries and asset-backed securities ahead of the Fed’s schedule and can then turn around and sell them to the Fed.

 Equity traders were shaken by Bernanke’s statement causing a large sell off across the major indices. Whether further open market operations conducted by the Fed will rally the market remains to be seen.

 “On or around the last business day of each month, the Desk will publish a tentative schedule of operations expected to take place over the following calendar month,” noted Bernanke. “The schedule will include the anticipated total amount of purchases and sales to be conducted over the month, operation dates, settlement dates, security types (nominal coupons or TIPS) to be purchased or sold, the maturity date range of eligible issues, and an expected range for the size of each operation.”

 Perhaps even more importantly, the unchanged interest rates will allow institutions to continue borrowing money at an extremely low rate, which will help in all aspects of lending, trading and investing.

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