The new year seems to have gotten off to a much slower start for residential mortgage-backed securities than was anticipated, implying that the market might have been premature in predicting that it would spring back to its usual self in a short period of time.

"People are scratching their heads a little bit, still waiting for the banks to come in," said one MBS trader that was perplexed by how slow the week was. "People think that bank demand is a given, but to a certain extent, it has not materialized."

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