By Jeanette Garretty, Robertson Stephens Advisors

Federal Reserve Chairwoman Janet Yellen spoke at today’s World Affairs Council of Philadelphia meeting and sent U.S. market commentators back into full “Will They (& When)/Won’t They” mode. By omitting a phrase - “in coming months” - that had been used a month ago while discussing likely interest rate hikes in 2016, she both reassured the financial markets that the Federal Reserve would be very careful in raising rates and possibly confused equity markets as to the real health of the U.S. economy. The timing of this change in verbiage seems to give more weight than most economists are willing to ascribe to last Friday’s rather puzzling jobs report showing only a net 38,000 jobs created in May. Such a sharp fall in job creation and labor force participation is almost certainly attributable to faulty seasonal adjustments in the Department of Labor survey, as well as special factors like the Verizon strike (now ended), as opposed to a sudden weakening in US economic prospects. And yet the jobs report appears to have pushed the Federal Reserve to signal to everyone, once again, that they remain heavily data-dependent in decisions regarding interest rates - and no data is more important that labor market data.

I am hard-pressed to find much economic or monetary theory in much of the interest rate commentary these days, be it from the Fed or from its horde of Fed-watchers. The cartoon below might be just as useful as anything else.

"A History of the Fed Funds Rate Since 1979" Cartoon by Bob Rich from Hedgeye.