As Yellen Rides Into the Sunset, An Odd Market Environment Exists Where "Phillips Curve is Dead"

When Janet Yellen took the podium for her final news conference earlier this week, there were several oddities. Not only was she a rare Fed chair who did not get re-appointed after achieving arguably strong economic performance – unemployment dropped, inflation remains subdued and the stock market did not crash as quantitative stimulus was extracted – but there were other oddities. In proclaiming the “Phillips curve dead,” Bank of America Merrill Lynch categorized the Fed raising interest rates as being interpreted as “dovish.”

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Phillips Curve is dead: Also, night is day and white is black

The Fed “failed to think tax reform leads to higher inflation,” BAML credit strategists Hans Mikkelsen,...