Yesterday, it took just a few simple words from Fed Chair Janet Yellen to flip the “on” switch for risk-on assets yesterday. “Global developments have increased the risks” to the outlook and “given the risks, I consider it appropriate for the FOMC to proceed cautiously.” This does not come as a surprise to us. We had been forecasting for 2 years now, (aside the obvious December FED policy mistake) that there are currently no macro-economically based reasons for the FED or any major global central banks to feel pressured to raise rates, and we do not see any pressures to do so rising in the 6 – 12 months time horizon.
