The Refi Setup: 10-Year Yield Compression

📉 10-Year Yield Compression = Refi Setup

The 10Y is coiling inside a descending wedge around 4.00%, signaling upside exhaustion.
A break below 3.90% → 3.66% is the key trigger — that’s the rate-relief zone.
Macro backdrop (credit stress, weak growth, liquidity preference) tilts odds downward.
Yield compression = rate repricing = higher refi probability.

🧭 Key Levels

4.18% → Resistance ceiling

3.90% → Battleground (break = downside momentum)

3.66% → Breakdown confirmation


Measured move projects ~35–40 bps lower toward 3.65% — enough to reprice mortgage spreads.

💡 Refi Mechanics

10Y ↓ → 30Y mortgage rates ↓

4.00% = ~5.8% avg mortgage

3.65% = ~5.35% avg mortgage

Even a 40–50 bps drop can spark a refi wave, as millions cross their break-even line.
Falling yields = faster prepayments → servicers buy Treasuries → more yield compression → positive feedback loop for lower rates.