This morning's Employment Cost Index came out of left field with sobering news for anyone counting on a 2015 Fed Rate hike.  Fed Fund Futures (which measure the likelihood of a hike by a certain time frame) went fairly wild after the report.  Beforehand, they'd indicated the highest likelihood of a 2015 hike in more than a month and a half.  Less than 30 minutes later, they showed the lowest chances of a 2015 hike in several weeks.  Only the few weeks during the apex of the Greek drama saw less of a chance.

So what was so game-changing about this data?  Nothing complicated.  Q2 wages grew at less than 1/3rd the pace of Q1.  Connect those dots to people like Yellen saying things like these over the past 7 months:

RTRS - YELLEN SAYS LABOR MARKET RECOVERY WILL PUT UPWARDS PRESSURE ON WAGES, PRICES AS LONG AS EXPECTATIONS REMAIN ANCHORED (Dec 17, 2014)

RTRS- FED'S YELLEN SAYS IF WE SEE CONTINUED IMPROVEMENT IN WAGES WOULD ADD TO MY CONFIDENCE ON INFLATION OUTLOOK (Feb 24)

RTRS- FED'S YELLEN SAYS SHOULD EXPECT TO SEE UPWARDS PRESSURE ON WAGES IN TIGHTER JOB MARKET, INCREASES IN MINIMUM WAGES HOPEFULLY GOOD SIGN (Feb 25)

RTRS- FED'S YELLEN - GROWTH OF WAGES EXPECTED TO PICK UP (July 15)

And we're left with the conclusion that a lack of wage growth--at the very least--confounds the Fed's assumptions about the connection between payrolls and wage growth.  At worst, it could shake Yellen's confidence in the inflation outlook.

Granted, she has previously said that wages are just one of the things the Fed is looking at in an attempt to make sure they're not hiking too soon or too late, but this was a pretty substantial change in that "one thing."  Besides, this is one of only a few things that Yellen consistently lists among her hot buttons.

Long story short: big downgrade in Fed rate hike expectations, and trading never deviated from the original message.  Now we're in a position where next week's data serves a critical role in shaping the outlook.  If it's as gloomy as this, it could cause a wholesale shift in bond market sentiment across the curve.