Mortgage-backed securities market participants may have been twiddling their thumbs last week, quietly closing down shop or tidying up their balance sheets in preparation for Y2K. But this apparent tranquility belies an excited anticipation from observers reflecting an expected strong showing for both residential and commercial MBS as they emerge right out of the gate on Jan. 3.

Mortgage spread product will make a comeback in early 2000, sources say, and January should be a fairly strong month, building upon a bullish spread outlook at year-end and excellent technicals for the sector in general, MBS market observers say.

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