Now that the fourth quarter is upon the mortgage market, commercial mortgage-backed securities players are keenly tuned in to where spreads are heading, waiting vigilantly to see how the market will react to Y2K concerns.

"There are a lot of deals that people would like to do, but there is a cat and mouse game going on as to whether or not there is an investor base," said Joseph Franzetti, the head of Salomon Smith Barney's conduit operation. "People want to stay liquid, and so they may not be looking to buy, but some are looking to keep their powder dry, hoping they could clean somebody's clock. As soon as people see some investor interest in the market, they may throw their deal in."

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