The FOMC meeting provided the market with two different signals - bullish but not hawkish

The FOMC meeting provided the market with two different signals - bullish but not hawkish. On the hawkish side we had the dots rise and an improved economic outlook. In contrast Yellen's speech downplayed the recent rise in inflation as 'noise' and gave a relaxed view of equity multiples. The market listened and quickly went back into risk assets with the S&P closing at an all-time high. We are concerned that the Fed are encouraging a very short term view, directing attention to the low rate environment rather than the potential for tightening in 2015. In contrast the Bank of England which last week pushed back on the markets expectations of 'lower for longer' and saw rate markets move abruptly to reflect this. For now the party is in full swing and volatility is suppressed but we fear the Fed are encouraging a more volatile correction down the line.