The inflation data in this report is probably more important than the jobs numbers. With 20 states pulling the plug on the federal unemployment subsidies just over the past two weeks, and another six states expected to in the weeks ahead, it will be the July jobs report that will show a re-employment boom.

In tomorrow’s report, the number to watch will be wage growth. The six month average wage growth has been 3.7%. That’s well above the average annual wage growth of the past ten years.

If we add evidence of sustainably higher wages to higher oil prices, the Fed’s inflation outlook becomes increasingly more wrong-footed. That’s why we’ve heard the change of language coming from the recent Fed meeting. And its why we are hearing Fed officials making the media rounds on a daily basis, planting the seeds/creating the expectations of change to the bottomless monetary policy punch bowl.

Given the market response, with stocks at record highs, it’s pretty clear that the markets deem the greater risk of policy error at this point, as being too easy for too long. So the more hawkish chatter has been well received. With that, hotter inflation data at this point shouldn’t weigh on stocks. But it should be fuel for commodities prices.