if modern central banking came with a
manual the comb would undoubtedly be
called ABC always be cautious ABC was
certainly the light motif for this
week's central bank meeting bonanza the
Bank of England the Federal Reserve the
Bank of Japan all refrained from action
on Thursday the Bank of England muttered
dark about brexit risks as the BOJ
grumbled in vain about the yen strength
the real action came from the Fed on
Wednesday now invested it expected a
cautious stance after woeful jobs report
and with a nerve-wracking UK referendum
on EU membership on the horizon but some
thought that policymakers would hint
that a July rate increase was a
possibility and instead the Fed served
up a cautious statement pessimistic
forecasts and a strikingly guarded press
conference the 10-year treasury yield
that Julie dropped to its lowest level
since August 2012 now fed chair Janet
Yellen said it's not impossible that
policymakers could raise rates in July
but investors have shrugged off this
feeble attempt at keeping the
possibility alive well there will be
more clarity on the UK referendum
outcome by then fed funds futures
indicate the investors only see a two
percent chance that the US central bank
will tighten them what is even more
remarkable is that markets are implying
that there is a two-thirds chance that
the Fed is paralyzed for the rest of the
year the last time investors with this
downbeat on US interest rates in
February global markets were in the
dumps essentially investors are seeing
the feds dovish pneus and doubling down
and his outspoken bond fund manager Jeff
Gundlach said the rate hike cycle has
left the building now perhaps that's
true but remember a majority of
policymakers still think the Fed should
raise interest rates at least twice this
year and three more times in 2017 and
despite the week may jobs report the
labor market remains strong the economy
relatively resilient the inflation
forecasts were actually raised the Fed
may be cautious but is not cat
Mike and given depressed yields even a
small shift rate expectations could
deliver a shock to the sparsely traded
summer markets this is Robin
Wigglesworth for the Financial Times