Battered Brand

Hoping (maybe against all reason) for that foreign money:

The Federal Reserve is scheduled at the end of March to halt its purchases of mortgage-backed securities, a move that could drive up the low interest rates that have helped the housing market show new signs of life. The Fed is gambling that private investors will step in to buy the securities, helping to keep rates from spiking. Senior officials in the Obama administration and at the Fed say they are counting in part on foreigners to keep the housing market funded.

But financial analysts and advisers familiar with foreign government funds, known as sovereign wealth funds, predicted that the United States will get limited relief from abroad.

"I don't think it will be enough to fill the hole," said Ajay Rajadhyaksha, head of fixed-income strategy for the United States at Barclays Capital.

..."A lot of sovereign wealth funds have a vested interest in seeing the U.S. stabilize," said R.P. Eddy, whose Ergo consulting firm advises foreign funds on U.S. and global economic issues. "But some wealth fund coming in to save the day? That is not going to happen."

...The Fed's departure from the market for mortgage-backed securities is only one step being taken to wind down the emergency measures put in place by the U.S. government during the financial crisis. But it is one that could have a direct effect on homeowners and potential buyers and on the tentative recovery in the real estate market.

...Asian wealth funds in particular are looking to tap into economic growth in their region as a broad new class of consumers emerges, offering fresh opportunities while consumption spending in the United States and Europe plateaus, said Jan Randolph, head of sovereign risk analysis at the IHS Global Insight consulting firm.

Not only is the United States seen as a slower-growth region, he said, but some funds are looking for non-dollar investments to guard against the currency's possible decline and are still hesitant about the U.S. mortgage industry.