In a market grasping for clues on the interest rate picture, a very real piece of information is expected Friday — the nonfarm payrolls report.
"The jobs number on Friday will be the data point that's probably going to decide where rates close the week," said Brandon Swensen, co-head of the fixed income desk at RBC Global Asset Management.
The September data is scheduled for release at 8:30 a.m. ET on Friday. Economists polled by Reuters forecast the data to show addition of 175,000 jobs, up from the less-than-expected 151,000 in August. The consensus also expects average hourly earnings to rise 0.2 percent for the month after a 0.1 percent rise the prior month, and the unemployment rate unchanged at 4.9 percent.
Peter Boockvar, chief market analyst at The Lindsey Group, said a number in line or above consensus on job creation likely indicates the U.S. Federal Reserve will hike later this year, possibly in November, while a number below expectations probably keeps the Fed on hold next month but leaves the door open for December.
The jobs report is a key indicator on labor market conditions, which is part of the Fed's so-called "dual-mandate" in determining monetary policy. Friday's release is the final nonfarm payrolls report before the Fed's November meeting, and chatter around a potential rate hike then has increased this week. But the meeting comes just days ahead of the U.S. presidential election and most analysts expect the Fed to raise rates in December at the earliest.
"If the jobs number is absolutely so, so strong, people could speculate the Fed could go in November, but November is election month. I find it hard to believe," said Peter Coleman, head trader at Convergex.
Since World War II, the Fed has raised rates six times in the third quarter of a U.S. presidential election year, according to Sam Stovall, chief investment strategist at CFRA. But his data showed the latest the Fed hiked in those quarters was in late September, and other hikes came after the election.
"I don't see the jobs report being strong enough to cause the Fed to want to raise rates in November," Stovall said.
Markets could get further clarity on the Fed's interpretation of the jobs numbers on Friday as several Fed policymakers are scheduled to speak Friday.
The lineup includes Cleveland Fed President Loretta Mester and Kansas City Fed President Esther George, who are voting members of the Fed's rate-setting committee and both wanted to raise rates in September. The other dissenter was Boston Fed President Eric Rosengren.
Mester is set to speak on CNBC's "Squawk Box" soon after the jobs report is released at 8:30 a.m. ET and give separate remarks about Fed communications at 12:45 p.m. ET. George is scheduled to discuss the U.S. economic outlook at 3 p.m. at the Institute of International Finance 2016 Annual Membership Meeting.
Investors will also focus on Fed Vice Chair Stanley Fischer, who is set to speak at 10:30 a.m. ET on the economy and financial regulation.
"If the number somewhat disappoints tomorrow, you've got all this backstop from the Fed speakers," said John Caruso, senior market strategist at RJO Futures.
Other Fed speakers set to speak include Federal Reserve Governor Lael Brainard at 4 p.m. ET on blockchain technology, and San Francisco Fed Senior Vice President Mary Daly at 3:40 p.m. on the U.S. economic outlook and the role of education in supporting the American dream.
Besides the timing of the rate hike, analysts are watching the jobs report for indications on inflation and overall growth.
"What you will find is as wages increase, you'll see a commensurate increase in income and that will lead to a rise in consumption" that should be good for growth overall, said Timothy Hopper, chief economist at TIAA Global Asset Management.
Markets have waited for the jobs report all week. The S&P 500 closed 1.04 points higher at 2,160.77 on Thursday, with a 0.35 percent loss for the week so far. The Nasdaq composite ended Thursday 0.1 percent lower for the week, and the Dow Jones industrial average was off 0.22 percent on the week.
Treasury yields have climbed sharply in the last few days as better-than-expected ISM manufacturing and services data added to a picture of economic improvement that should support a rate hike later this year. The , most sensitive to near-term expectations of rate hikes, was last near 0.85 percent after hitting a fresh high going back to June 3.
To be sure, even if the September jobs report is solid there are other hurdles for markets to pass before the end of the year. Some strategists expect the Fed could end up delaying the next rate hike beyond December to early next year.
"December is much more of a coin flip," RBC's Swensen said. "We have to see how the data comes out, how the market reacts to the election."
No major earnings are expected Friday. Other economic data on the calendar include wholesale inventories and consumer credit. Traders will also watch the weekly oil rig count's affect on U.S. crude oil prices, which topped the psychologically key $50 level for the first time since June on Thursday. China is also expected to release foreign exchange reserves overnight.