Last Tuesday, financial markets moved into “risk-off” mode as the US stock market sold off while bonds and the US dollar rallied. This followed the stronger than expected CPI data and Janet Yellen’s speech where she clearly communicated the Fed will be hiking rates in 2016 as long as the economy continues to improve, which she expects it will. The Fed is focused on employment and inflation data; especially wage inflation. Employment has been consistently strong for months. Last Thursday’s jobless claims report regressed somewhat, but taken with the previous week’s data still showed consistent strength in employment. Friday brought us the second revision of Q1 US GDP, which was revised down less than expected to -0.7%. Digging into the data in the personal income section showed that compensation of employees, i.e. wages, grew 4.5% YoY.