Don't expect the Federal Reserve to hike interest rates next week. The central bank is way too cautious to rock the boat with inflation still so low, said Brett Wander, fixed income chief investment officer at Charles Schwab Investment Management.

"The recent stock market volatility is not helping," said the Charles Schwab (SCHW - Get Report) executive. "If they do raise rates it will be in December and we only see a 50% chance of that happening."

Wander added that employment is on a positive track, but the low level of inflation is "not enough to offset the positives going on in the economy."

The August jobs report revealed that the 151,000 new jobs were added last month versus 180,000 expected. Shortly after the August jobs report was released, U.S. bond yields were just about flat, but have since ticked up with the 10-year Treasury now around pre-Brexit levels of 1.73%. This highlights the fact that the interest rate picture for the Fed still seems pretty ambiguous.

"The 10-year yield is not controlled by the Fed," said Wander. "Even if the Fed were to raise rates the 10-year yield will not rise above 2% because of inflation."

For years, the equity market has benefited from historically low interest rates, which make a company's debt financing less expensive, and hopefully spurs economic growth. The disappointing August jobs report was no exception. The equity market opened significantly higher after the report on hopes that the Fed will hold off raising interest rates this month. So, for equity investors, bad news was likely good news.

Wander expects the volatility to continue as long as the Fed's next move remains a question. Eventually the fundamentals will take over, however, and good news will be good news. "A 25 or 50 basis point rise in the Fed Funds rate will not act as a dramatic impediment to economic growth," said Wander.

As to where yield-starved investors may look for income in the current environment, Wander warned against a rush into high yield or emerging market bonds where yields -- and risks -- may be elevated. "High yield could be overvalued since investors' insatiable demand for yield creates distortions," said Wander. "Our recommendation is to think long term and be mindful of unintended risks."