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Fed's Statement on Operation Twist with a Twist

Some traders found Wednesday's Fed statementto be a bit gloomier than expected.

One reason may be the addition of concern about Europe: "there are significant downside risks to the economic outlook, including strains in global financial markets."

The Fed did launch much anticipated "operation twist" with a twist—it is also taking direct aim at mortgages. The Fed said it would replace $400 billion in short-term Treasurys (3-years or less) to the same amount of longer term securities—with durations of 6- to 30-years.

But it also said it would reinvest the runoff from its maturing mortgage securities back into the mortgage market. Take alook hereat the Fed's statement and how it was changed from the August statement, courtesy of Ian Lyngen, senior Treasury strategist at CRT Capital.

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