U.S. Treasury equity in the public-private investment program that was designed to support market functioning and facilitate price discovery in legacy mortgage-backed securities markets has produced a 27% gain since its inception, according to the Treasury’s fourth quarter 2010 update.
“Because they got in early they got a very nice return,” Braver Stern Securities head of investment strategy Scott Buchta said.
“This is one of the government programs that’s had the most success, meaning it’s done exactly what it’s supposed to do,” he said in an interview. “It really gave the market a very good backstop and a lot of confidence…that this money was there to support prices.”
PPIP activity was relatively lower during the quarter, but Buchta said he considered this good news for the market as it indicates the market has not had as much need for the program’s support.
