If you’re hoping to Twist Again, you’ll have a lot better luck with Chubby Checker than Ben Bernanke. It appears the Fed chief is currently more of a wall flower.
By the Twist we’re talking about a a 1960s-era measure in which the central bank sold short-term debt and bought long-term debt in an effort to flatten the yield curve and drive down long-term rates.
Investors had been hoping that when Ben Bernanke spoke at a scheduled event on Thursday he would reveal -- or at least suggest -- the central bank intended to implement a similar program in 2011 to jump start the recovery.
Although he reiterated the central banks commitment to stimulating the U.S. economy, he offered few other details, leaving investors disappointed.
Trader Joe Terranova doesn’t see any fiscal solution to the woes that vex the market. “We’re either going to grow our way out of this mess or we’re going to see more deterioration in the equity markets,” he says. “Gridlock in DC has left markets on their own."
Tim Seymour thinks there’s even more at play. He thinks Chairman Bernanke was burned by QE2 because it created commodities inflation and that led to higher prices at the pump and higher prices at the supermarket. “Now, I think he will do anything possible to avoid increasing commodities inflation,” says Seymour.
For more on Operation Twist check out our interview with Jim Caron, Morgan Stanley global head of interest rate strategy. Watch the video now!