The Federal Reserve has launched Operation Twist. The basic idea behind operation twist is to flatten the yield curve. What the Fed is attempting to do is bring long term debt yields down in order to spur business expansion and the housing market. Right now as I write this article the 10YR is below 1.9%

This is a STERILE action by the fed, which means they are NOT injecting any more money into the system.

They plan to trade roughly $400 Billion dollars in paper. They will be selling 3yr and less debt and purchasing between 10 and 30yr. Roughly 29% will be focused on the purchase of 20 to 30yr notes, roughly $120billion.

UPDATE:

One thing I forgot to mention is that the fed is planning to take funds from maturing securities and purchase agency mortgage backed securities. As of time of writing this article the 10yr is at 1.875 and the 30yr is at 3.01. Levels we haven’t seen since the 1940s.