The only good part of the jobs report was the most important part of the jobs report

The March jobs report was a miss.

Nonfarm payrolls grew by just 126,000 in March against expectations for job gains of 245,000, marking the first time in 12 months that payroll gains didn't top 200,000.

Moreover, job gains in January and February were both revised lower, bringing the 3-month trend of job growth below 200,000 to 197,000.

But there was one bright spot in the report: wage growth.

In March, average hourly earnings rose by 0.3% month-on-month and 2.1% compared to the prior year. Both of these beat expectations for wage gains of 0.2% and 2.0%, respectively.

And while headline job gains have been strong over the last year, wage growth has been the missing piece of the puzzle.

As the unemployment rate has tumbled - it actually fell by 0.8% in March, though with rounding it was reported unchanged at 5.5% - the Fed and others have been working to judge how much "slack" remains in the economy.

Slack is basically a way of thinking about who has leverage: employees or employers. If wages aren't rising faster than inflation, then employers can be judged to have the upper hand. If this trend reverses, then the labor market is indicating that it's tightening, meaning that the pendulum has begun to swing back in favor of workers.

Over the last several months, indicators like the JOLTS report - which shows how many job openings there are and how many people are quitting their jobs - have pointed to decreasing slack in the labor market. And in its latest policy statement, the Fed said, "A range of labor market indicators suggests that underutilization of labor resources continues to diminish."

But the Fed also lowered its "central tendency" for the long-term unemployment rate to 5.2%-5.0% from 5.5%-5.2%, meaning that it sees the unemployment rate at which inflation beginning to accelerate as lower than it previously did. In short, this means the Fed still sees "slack" in the labor market given that huge payroll gains have not lead to an increase in wages.

And while Fed chair Janet Yellen said in her press conference following the latest FOMC meeting that wage increases would not be a precondition to interest rate hikes, Yellen made clear that the Fed will need to have "reasonable confidence" that inflation (read: wage growth), will move back towards the Fed's 2% target over the "medium-term" for the Fed to begin raising rates.

The bond market reaction following Friday's report certainly pointed towards markets having less faith the Fed is really anywhere near raising rates. And Bloomberg's Matt Boesler noted that certain market measures now place the probability of a rate hike this year at less than 50% and a move within a year at only 55%.