Neutral rather than negative on the ten-year AAA/swaps basis. After all, most of the post-1998 historical trading range reflects a poor credit view of the sector, which is now obsolete. Over a three-to-six month interval, the house view is that swap spreads could tighten to perhaps 30bps in the ten-year area. This gives a stronger argument for favoring AAA CMBS against Treasuries. Continues to think investors should be focused on down-in-quality trades.
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