After this week's jobs report, the Fed is in control

The Fed is now firmly in control of its own destiny.

On Friday, the July jobs report came in largely in line with expectations.

Nonfarm payrolls grew by 215,000 (225,000 expected), and the previous month's print was revised up to 231,000 from 223,000.

The unemployment rate was unchanged at a seven-year low of 5.3% and average hourly earnings grew slightly month-on-month by 0.2%.

The focus of this report was squarely on what it meant for the timing of the Fed's first rate hike in a decade.

And in short, the Fed still has all of its options on the table.

After Friday's report, it looks like the Fed and the economy successfully crossed the first major checkpoint in a crucial stretch of economic data before the Federal Reserve's meeting between September 16-17.

In May, Fed chair Janet Yellen said it would be appropriate for the Fed to raise rates this year "if the economy continues to improve" as expected.

And in its latest policy statement, the Fed said it could raise rates if it saw "some further improvement in the labor market" as opposed to just "further improvement" in the prior statement.

Friday's jobs report, then, largely confirmed that the labor market's improvement is solid. Or, seen another way, that it showed "some" improvement.

In a note following the report, Deutsche Bank's Joe LaVorgna pointed out that the only one of Yellen's preferred labor market metrics that did not improve was long-term unemployment as a percentage of total unemployment, which climbed to 26.4%.

But this is a nitpicky detail, and on balance, most economists found the jobs report boring because there was no element of surprise.

The report was not bad enough to derail the Fed's and markets' expectations for a rate hike this year, and it was not stellar enough to lock in a September rate hike.

For the markets part, the swaps market had priced in a 47% chance of a hike in September before the jobs report. Following Friday's number, this had climbed to as high as 52% according to Reuters.

And so more than ever in recent months, there's a convergence between the Fed's criteria to raise rates, the economic data, and the market's expectations.

There are, however, still have a couple of critical checkpoints to reach before the Fed's next meeting.

Retail sales numbers, housing market indicators, and the second estimate of second-quarter Gross Domestic Product are due later in August.

And of course, there's still one more jobs report due out on September 4.

But for now, the labor market has Wall Street more convinced that the Fed can move in September.

Citi's Steve Englander had said before the report that payrolls growth above 200,000 was enough for the Fed to move next month.

In a note to clients after the jobs report, Englander said, "Overall, Fed officials are probably saying a prayer of thanks that today's data look like an accurate reflection of the state of the economy, rather than some data aberration, and are consistent with the signals they have been sending."

In other words, the Fed has exactly it wants.