HousingWire publisher Paul Jackson just sent me an email in reference to an article by Jody Shenn called "Mortgage-Bond Spreads Surpass Lows Reached During Fed Buying" to which our publisher commented that, "Treasuries are too rich for buyers, so they're flooding the agency MBS space." The agency MBS space is indeed surging at the moment, with buyers outnumbering sellers by a 3x1 margin according to one trader I spoke with. This is positive news for for the agency space, at least, while private MBS (and wider ABS markets) aren't exactly feeling the love right now. To be sure, the investor base that loves government backing -- be it Treasuries, Fannies, Freddies, Ginnies – always gives this feeling of back to forth. As Rob Chrisman puts it on Mortgage News Clips, choosing between the two today is simply a matter of yield. Considering that GSE reform is on the horizon, however, the secondary market is only just now beginning to consider the full impact on trading agency bonds if and when the event comes where government-sponsorship is pulled (or at least modified in some way). How will agency MBS trade then? I was taken somewhat aback when one trader posited recently that relative value was being found in certain CMBS tranches linked to the Public-Private Investment Program (PPIP). It almost feels like that program is utterly offline, now that government support in the form of TALF is shut and nearly zero media coverage is being given to the matter. Despite negative news headlines on rising delinquencies within the CMBS sector, one trader noted a surge in activity in AMs and AJs -- two commercial investment tranches below triple-A that are PPIP-eligible. Not as if there's gold in every mountain, of course. Deutsche Bank analyst Harris Trifon recently sounded a warning on certain vintages, saying that 2006 AJs will only return $0.87 on the dollar. 2005s on the other hand, are holding up significantly better. "We believe that many PPIP managers and other money managers will and should increase their investments in bottom tier 2005 AJs," writes Trifon in a research report. In a speech last week to the Senate Finance Committee, Richard Hillman of the US Government Accountability Office noted improvements in securitization markets and stabilization of certain legacy asset prices as motivating the closing of TALF and PPIP. However, since then "indicators we have been monitoring suggest credit markets have been able to sustain their recovery despite the winding down of key programs initiated by the Federal Reserve, Treasury, FDIC and others." In fact, according to Pensions and Investments, PPIP managers are now seeing returns of close to 14%, compared to 8% in March and under 2% in December 2009 –- results that would be very attractive in the private MBS space. Jacob Gaffney is the Editor of HousingWire. Write to him.