The Bureau of Labor Statistics releases the August Employment Situation report Friday at 12:30 GMT, with economists expecting a modest rebound after July's contraction.Payrolls are forecast at 55,000 to 58,000 following July's 23,000 drop. The unemployment rate is expected to hold steady at 4.1%. Average hourly earnings are projected to rise 0.3% month-over-month, up from 0.1% previously.Average Hourly Earnings Is the Line to Read FirstThe headline payroll figure will move the tape. The wage line is what moves the Fed.A jump from 0.1% to 0.3% month-over-month is a tripling of the monthly pace. That matters disproportionately this cycle because Chair Kevin Warsh built his entire hawkish case at Jackson Hole on prices rather than employment, citing PCE at 3.7% annually and 4.1% over six months, with more than half the PCE basket rising over 3% in the past year.Governors Michael Barr and Christopher Waller have both signalled the labor market is not their constraint — Barr called it "stable," Waller "satisfactory shape."A committee that has already set employment aside will not reweight it on a 55,000 print. It will reweight on wage acceleration, because that is the transmission channel from labor to the inflation problem it says it is solving.The Payroll Number Is Mostly Noise This CycleTwo structural factors reduce the signal in the headline.The first is labor supply. July's unemployment rate fell to 4.1% while the labor force shrank 264,000 and participation dropped to 61.4% — the lowest outside the Covid period since the mid-1970s. With participation that low, the breakeven pace of job growth needed to hold unemployment steady sits far below historical norms. A small number no longer means a weak economy.The second is revisions. May was cut 66,000 and June 37,000 — 103,000 fewer jobs across two months. Initial August figures have been revised lower four years running. Whatever prints at 8:30 will not be the final number.That is why the unemployment rate holding at 4.1% and the wage line carry more weight than the payroll count itself.The Reaction Function Is InvertedRates have sat at 3.50%-3.75% since December 2025. The September question is whether tightening resumes, not how quickly easing proceeds.That reverses the usual trade. A strong print is the hawkish outcome. A soft one takes hike risk off the table.Hike odds have round-tripped over eight sessions — roughly 35% before Warsh spoke, up to about 70% Thursday, then back toward an even split. The FOMC decides September 15-16, with CPI landing September 11 in between.Dollar, Yields and Gold Are Positioned Ahead of the PrintThe dollar, Treasury yields and gold are all seeing heightened pre-report positioning.The setup into the release is unusual. The VIX dropped to nearly 14, its lowest since January, while bond yields sit near multi-year highs on fiscal rather than growth concerns. Mohamed El-Erian told CNBC at the Ambrosetti Forum he sees no appetite for immediate US fiscal consolidation and expects continued upward pressure on yields.For crypto, that fiscal-versus-growth distinction determines which way the yield move cuts. Bitcoin cleared $80,000 Thursday with yields elevated, and spot ETFs took in $731 million — their largest single day since January, with net assets crossing $103 billion.Whether that bid extends through a second session is the more informative signal than the payroll print itself.