If we get a huge jobs number, rate hikes could effectively begin today

It's Jobs Day in America. From our full preview of the report, here's what Wall Street is looking for:

• Nonfarm payrolls: +225,000
• Unemployment rate: 5.3%
• Average hourly earnings, month-over-month: +0.2%
• Average hourly earnings, year-over-year: +2.3%
• Average weekly hours worked: 34.5

Since the Fed's last statement, which said the Fed would need to see "some" further improvement (rather than just further improvement) in the labor market to raise rates, markets have begun to zero in on the Fed's September meeting as the time for the first rate hike since July 2006.

And in an email ahead of the report, Peter Tchir at Brean Capital said that a solid jobs report on Friday could see the market effectively act as if the first rate hike is here.

"There is a reasonable chance that today's NFP report will push the market close to 100% certainty that a September hike is coming," Tchir wrote. "The bar to a hike seems set reasonably low and the consensus is that this report will clear that hurdle."

Tchir added:

Since it is usually the anticipation of the event, rather than the event itself, that drives trading, it seems as though today could be the day the market decides to trade as though we are getting that rate hike.

In general I would like to assume that much is priced in and that there won't be a big reaction. That the dollar won't move much, the long end of the treasury yield curve can actually rally, commodity prices can stabilize and risk assets can do well.

That is what I would like to assume, but nothing about recent trading patterns give me any comfort.

Over the last few weeks, short-term US Treasury yields have risen, notably the 2-year note, which is trading near a 4-year high ahead of Friday's number.

In a note to clients this week, Citi's Steve Englander said that two consecutive jobs reports with payroll gains over 200,000 would be enough to get the Fed to act in September.