Issue 133 - Hello and Happy Tuesday.

The 10-year Treasury finally slipped under 4% last week, and that has everyone watching to see if this level holds. Since mortgage rates follow the bond market, this move could be an early sign of some relief ahead.

It’s not a guarantee, but after months of choppy trading, the market’s tone feels different. If yields stay below 4%, we could see rates ease heading into the Fed meeting on October 29.

Personal Note:

Not a ton to report except that the school had a fun event Friday night. Foam dance party, auction, food trucks, and all-around great weather!

TLDR (Too Long Didn’t Read) Summary

• ↔️ RATES - Rates holding steady.

• 📊 TECHNICALS - 10 Year Below 4%.

INTEREST RATES
Rates 📢 October 21st, 2025

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💡 Why This Matters

Mortgage rates are holding steady this week, hovering near their lowest levels since early summer. The 10-year Treasury slipped back under 4%, signaling that investors are flocking to bonds amid optimism the government shutdown could wrap up soon. That’s giving mortgage-backed securities a small lift — and helping keep rates in check.

🏦 What’s fueling this stability:

• Shutdown pressure = lower yields. When the government stalls, spending slows — and that cools inflation fears, which supports lower bond yields and mortgage rates.

• Fed outlook. Markets are expecting two more rate cuts this year and one next year, but some economists disagree. If the Fed holds steady longer, we could see rates bounce back up temporarily.

• CPI on deck. Friday’s inflation report could be the next market mover. If inflation comes in softer than expected, it could open the door for rates to dip below 6% — maybe even toward 5.75%.

📉 Realtor Insight: Steady or falling rates are keeping buyers active even as headlines focus on the shutdown. If CPI cooperates later this week, this lull could turn into another mini-rally for fall home sales.

TECHNICALS

Yields Break Below 4%

Mortgage bonds traded sideways last week, but a quiet breakout may be forming. The 10-year Treasury yield dipped below 4% for the first time in months — a level that could signal a trend shift if it holds. Here’s what’s happening 👇

🏦 Inside the Market Move

After weeks of choppy trading, bonds are showing signs of stabilization as investors brace for the October 29 Fed meeting. The drop under 4% reflects growing confidence that another 0.25% rate cut is likely, even as inflation remains above target.

🔍 Here’s what traders are watching:

• 💹 Support: Mortgage Bonds are holding firm near their 25-day moving average, a critical floor for pricing.

• 🚧 Resistance: The next ceiling sits around 101.31, and a break above could open room for lower mortgage rates.

• 📉 Momentum: If yields stay under 4%, it could strengthen bond demand — helping mortgage rates ease further.

💡 Why It Matters for Mortgage Rates

📊 Mortgage rates follow the bond market, not the Fed directly — but Fed expectations heavily influence yields.
🪶 A stable or falling 10-year yield typically leads to lower mortgage rates, especially if the Fed signals continued easing.
⏳ With limited economic data due to the government shutdown, technical levels like this 4% line have become the market’s compass until more reports resume.