The WSJ has an article today which talks about exactly the same issues I raised in my previous post about the Treasury market not behaving normally. They raised the same points about operation twist and the fed revealing its forecast for short term interest rates remaining at zero till 2014.
One very interesting statistic in the article is that since operation twist started, the Fed has bought 91% of all the supply from the US Treasury for bonds maturing in 20 to 30 years. That is clear indication that the Fed is having a big influence at the long end of the yield curve. The Fed is succeeding in providing stimulus to the economy this way as mortgage rates still remain near all time lows when they should have normally started to go up.