Four reasons for caution on a market in transition

1) Central banks are behind the curve At 3.76%, the US unemployment rate has just reached its lowest level since 1969, and is now marginally below the Federal Reserve's year-end forecast. It has also been sat below its estimate of the level consistent with a neutral policy setting for well over a year. With US inflation also now more or less at its target of 2%, the Fed is in catch-up mode. As things stand, the funds rate is at least 100 basis points below the Fed's estimate of neutral, and remains negative in real terms. With Congress and a pro-business president aggravating inflation...