Today's report drove yet another increase in Treasury yields and fanned the flames that the FOMC may hike the federal funds rate one more time at one of its two remaining meetings of the year. 

Another rate hike before the end of the year is a possibility, but for now, our base case remains that the last rate hike of the tightening cycle occurred in July.

The earnings data from the employment report are a somewhat crude measure of wages, so the Employment Cost Index (ECI) to be released on October 31 will be critical to confirming that labor costs are indeed decelerating. If the CPI and ECI data cooperate, we would expect the FOMC to remain on hold at its upcoming November 1 meeting.