The market has not yet plunged into its seasonal slowdown - though it's clearly approaching - as last week's business was more about counting the post-August deals expected to emerge when the market returns from holiday.

Analysts at Merrill Lynch said that spread direction following the lull is the key concern for market participants. Despite the recent flood of paper, the supply-and-demand scenario continues to rock pricing at the tighter end of talk. Last week, Preferred Mortgages priced its GBP460 million (US$835million) nonconforming RMBS transaction inside of talk. The euro-denominated tranches came inside the sterling paper across the structure, indicating that the demand for euro paper remains strong.

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