With some of the heavyweight earnings reports out of the way and the Federal Reserve’s decision to hold rates steady in the rearview mirror, the market’s focus is now on the monthly employment situation, due out Friday morning.

The market will be laser-focused on whether the Fed is justified in its current hawkish stance, given the fact that we’re nowhere near growth of 3 percent or more.

This report, in particular, looms large. It’s the penultimate report before the Fed rate hike decision in June, and if it shows significant deterioration in job gains — and yet another lackluster gain in wages — the Fed may have to back off its monomaniacal path toward higher rates.

The jobs report on Friday comes, too, as the second quarter is showing a marked slowdown all across the G-7 universe, and the U.S. is no exception, even as the economy is solidly in expansion.

What’s been evident from the latest data points is the U.S. economy is growing at a solid pace of 2 percent or more, though starting to show signs of deceleration in both business activity (as evident in the latest ISM data) and consumer spending (as seen in the latest auto sales figures).

That will have massive implications for all capital markets, as bonds will bounce, the dollar rally will stall in its tracks and equities could get a second wind due to a less aggressive Fed.

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