Some idea on Operation Twist# Stock
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Operational twist will raise the cost on short-term borrowing, which will
raise the cost for security purchase by margin. So it is normal to see the plunge we see these two days. Also, the increase on short-term borrowing make other liquid asset (like stock, commodity, short-term treasury) less attractive
For the commercial banks, the increase on short-term borrowing rate will increase their cost to have deposit and the decrease on long-term rate will lower their revenue on long-term loans, which is their main business.
raise the cost for security purchase by margin. So it is normal to see the plunge we see these two days. Also, the increase on short-term borrowing make other liquid asset (like stock, commodity, short-term treasury) less attractive
For the commercial banks, the increase on short-term borrowing rate will increase their cost to have deposit and the decrease on long-term rate will lower their revenue on long-term loans, which is their main business.
