US10Y Technical Analysis & Mortgage Rate Outlook Weekly. Aug. 4US10Y Technical Analysis & Mortgage Rate Outlook
(Based on Weekly Chart & Current Economic Context)
Technical View (Weekly Timeframe)
The US10Y yield is sitting around 4.21%, in the middle of a wide consolidation range that’s been developing since late 2023. This range is bounded by strong resistance near 4.62%–4.80% (purple supply zone) and support near 3.86%–4.00%.
* Trend Structure:
* We are still in a macro uptrend from the 2020 lows, but recent action has been sideways-to-lower since late 2023.
* Yields remain above the long-term uptrend line but have failed to sustain breakouts above 4.80% multiple times — showing sellers are defending that zone heavily.
* Support Levels:
* 4.00%–4.10% → First key demand zone.
* 3.86% → Major floor; losing this could trigger a larger downside move toward 3.50%–3.60%.
* Resistance Levels:
* 4.50% → First overhead supply.
* 4.62%–4.80% → Strong long-term resistance. A breakout here could signal a push toward 5.0%+ yields.
Economic & Labor Market Context
The latest labor market report showed slowing job growth but still relatively low unemployment. Wage pressures have eased slightly, hinting that labor-driven inflation is cooling. However:
* Inflation remains above the Fed’s 2% target, making the central bank reluctant to cut rates aggressively.
* The bond market is pricing in fewer rate cuts in 2025 than previously expected, keeping yields elevated.
* The Fed’s tone remains “higher for longer” until inflation shows more decisive softening.
Mortgage Rate Implications
Mortgage rates tend to follow the 10-year Treasury yield plus a spread of roughly 1.8%–2.0%.
* If 10Y Stays Near 4.20% → 30-year fixed mortgage rates likely hover around 6.0%–6.2%.
* If 10Y Tests 4.80% Resistance → Mortgage rates could climb toward 6.8%–7.0%.
* If 10Y Breaks Below 4.0% → Mortgage rates could fall into the 5.8%–5.9% range.
Given the Fed’s cautious stance and sticky inflation, a sustained drop below 6% mortgage rates in the near term looks unlikely unless we get a meaningful deterioration in economic growth.
My Thoughts
* Short-term (1–2 months): Likely range-bound between 4.0% and 4.62% until a major macro catalyst (CPI, Fed policy shift) forces a breakout.
* Medium-term (3–6 months): If economic data continues to soften, yields could drift toward 4.0% and help mortgage rates ease modestly. If data surprises to the upside, a retest of 4.80% is likely.
* Mortgage Rate Forecast: Expect 30-year fixed rates to stay between 6.0% and 6.6% for the rest of summer, with downside limited unless the Fed signals an earlier pivot.
