With allowances and respect for August payrolls’ market-moving potential, equities felt inclined to settle down after a somewhat turbulent month.

In “Return Of The Melt-Up?” I wondered if the daily range of spot outcomes for US stocks was poised to compress. On the eve of the US jobs report, the answer was “yes.” Markets were in wait-and-see mode.

Should the headline NFP print come in unequivocally hot or unequivocally cold, this brief missive could be antiquated by fireworks in both equities and rates, but an in-line set of numbers might serve to becalm markets, at least until the next CPI report (and notwithstanding a challenging seasonal coming up for stocks).

One-month realized picked up in August, but days like Thursday, where you get a basically unchanged SPX, underscore the potential for vol to mean revert, activating familiar self-feeding dynamics.

After de-allocating from stocks in fairly dramatic fashion this month, vol control would probably be a buyer going forward as long as spot stays relatively well-behaved, which it certainly did headed into US payrolls.

It helps when rates are docile, which they generally were into month-end. In addition to the rebalance, the modest advance for Treasurys “was consistent with the process of pricing in a consensus payrolls print,” BMO’s Ian Lyngen and Ben Jeffery remarked.

“Bonds were struggling in recent days to find any sort of ‘new incremental sellers,'” Nomura’s Charlie McElligott wrote, suggesting we might’ve “found a level where buyers were incentivized to step in following what had been a month and a half of cheapening.”

Overall, August was obviously a disappointing month for balanced portfolios. Five straight days of gains couldn’t rescue stocks and bonds were beset (blame Fitch, capitulation from wrong-footed duration longs, the r-star debate, foreign official selling to defend flagging currencies or whatever you like).

Traditionally, September isn’t kind to equities, and I suppose it’d be naive to suggest this time is different. But inflation is generally cooperating, and all we need for a Fed “hold” at next month’s meeting is a cool (or even cool-ish) NFP headline and a benign August CPI report in a few weeks. Is that too much to ask? (Maybe.)

It’s key, I think, to note that if the labor market is on the cusp of a cooling sustainably, and inflation doesn’t evidence a disposition to re-accelerate outside of factors beyond the Fed’s control, then a hold at the September FOMC would probably mean the hikes are over — even if the hawks insist on preserving optionality through the dots.

Put differently: If the Committee doesn’t find cause to hike in September and the data cools further by November, it’s not obvious what the rationale would be for hiking one more time, unless it’s just — you know — putting one more bullet in the horror movie villain to be sure it’s actually dead.

Coming full circle, I wouldn’t rule out unwanted volatility around the jobs report. “NFP Fridays have a well-earned reputation as particularly volatile trading sessions,” BMO’s Lyngen and Jeffery added. “When combined with the looming holiday weekend and late-summer trading mentality, it’s challenging to imagine that this week will go gracefully into the late-close (thanks again, SIFMA).”