The events of this past week serve as an exclamation point in one of the many sentences that tells the story of the big shift away from the generationally high rates seen at the end of 2023.  The story has had its ups and down since then, but it had been going fairly well for fans of low rates over the past 3 months. In fact, the last 3 months mark the first successful defeat of what had looked like yet another “false start” in the road toward lower rates.  Measured in terms of 10yr Treasury yields, long term rates have only made 3 attempts to drop more than half a percent since they began skyrocketing in 2022.  The first two attempts ultimately gave way to new highs.  If rates had moved just a bit higher a few months ago, it would have happened again. Zooming in on the past year, here’s a general breakdown of the key motivations for these swings: May through July could be described as cautiously optimistic due to well-received improvements in inflation data.  During this time, the Fed said it was feeling more and more confident about cutting rates, but that it could be patient due to a labor market that was still rather strong.  Similar sentiments were shared by the Fed as recently as this week, but that was before this week’s jobs report came out. Headline job creation (nonfarm payrolls) fell to 114k in July–well short of the forecast consensus of 175k.  In addition, the unemployment rate ticked up to 4.3% from 4.1% and wage growth fell to 0.2% from 0.3% with annual growth hitting pre-pandemic levels for the first time since stabilizing at long-term highs.