Fannie Mae's October operating results conveyed negative retained portfolio growth, which is indicative of decreasing purchase opportunities as the most recent refinance boom wanes, analysts said. However, there are some positive highlights, namely the fact that Fannie's total book of business grew faster than expected and its duration gap remained tight. The October results were released last week.

Fannie's retained portfolio dipped by a 5.7% annualized rate in October. Citigroup Global Markets said that this is below Citi's fourth-quarter forecast of a growth rate of over 1%. "Though negative, the shrinkage in the portfolio is not unexpected, as option-adjusted spreads (OASs) have remained very tight over the past weeks, and is consistent with guidance given during the 3Q03 conference call," wrote analysts from Citigroup.

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