It’s been 50 years since Chubby Checker did the first very successful “echo” of his surprise hit, The Twist. It’s also 50 years since the Fed tried to “twist” the yield curve.
What made Chubby’s version a surprise hit was that the group who recorded the song in 1958 (Hank Ballard and the Midnighters) weren’t available to play it on Dick Clark’s American Bandstand, so Chubby and his group, The Fat Boys, did a live cover on Dick’s afternoon TV show.
There are more echoes in this story. For example, the record only held number one on the billboard chart in 1960 for a week, but it got to number one for two weeks when it was re-released in 1962. On top of that, the actual follow-on hit on Parkway records in 1961 (image above) was a bigger hit around the world than Chubby’s first round.
Which leads me to the musical question:
Can the Fed get a bigger hit in its remake of the 1961 classic yield curve operation as it does the Twist this time around? They can only hope.
The first reaction, in spite of the advance warning, is seen in the Bloomberg yield curve snapshot a buddy sent me, comparing yesterday’s Treasury curve to the curve ten minutes after the announcement:
Yup. Yields at the long end of the curve are down, and yields at the short end of the curve are up. We’ll see whether this lasts, and whether even more attractive terms for borrowers will get them to start making some pro-growth investments.
Sadly enough, today’s bond market and the Fed’s deliberations have become part of the toxic mix we call politics. Even if we discount leading Presidential candidate Perry’s not-so-veiled threat against Chairman Bernanke, it’s really hard to ignore the letter the top four members of the Republican caucuses in the Senate and the House sent the Federal Open Market Committee as they began their policy discussions. Apostate Bush speechwriter for economic issues David Frum seemed taken aback by the ugly reality of sitting members of the leadership of our government urging the Federal Reserve to stop trying to help our economy in an official letter to the Chairman.