The spread widening that the asset-backed markets have seen over the last few months looks to be over, according to market pros, as the anticipated flood of issuance in the U.S. and European markets fails to materialize.

"Swap spreads have been tightening and that seems to have taken bond spreads in as well, but in some markets, like the sterling market, it is also because there is a lack of paper around," said one trader. "I wouldn't say that there is a lot of trading activity but the tone of the market is generally positive."

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