In the give-and-take world of the markets, the CMBS sector has been on the latter side of that trade this week. Spreads are moving back out since snapping into 2001 narrows in a simple profit-taking mode. Bid lists seen the last couple of weeks are now quiet, leaving dealers holding the bag and looking for new homes. This has the 10-year triple-A spread to swaps back toward 50 basis points from recent tights of 44 basis point levels. The most interesting part of the trade is that now the buyers, in some cases, are former sellers, picking their paper back up at cheaper levels.
Given the speed at which the market tightened early this month, some retraction was not wholly unexpected. In fact, spreads remain in a range agreed upon by most dealers and should remain as such for some time. The current dearth in new issuance is keeping demand healthy, while a growing calendar is pitting that bias against itself.