Favorable technicals should support ABS spreads, especially in autos, which has seen negative net issuance in 2003. Best places to find value in ABS are in sectors lagging tightening in corporates or swaps. Go down in credit to subordinates and extend in duration in fixed rates, where supply’s especially light. Cautious on US consumer, however, and economic data does little to change firm’s view so it only assigns a "modest overweight." in sectors they like. Given this, although markets have a more positive psychology this year, is mindful of the typical year-end widening tendency of ABS, quickly eradicating, any near-term spread tightening.

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