For all the talk that central banks have taken over financialmarkets, the paralysis gripping the Federal Reserve over upsettingbond traders sure makes it seem as if it's the other wayaround.

Time and again, Janet Yellen and other Fed officials have triedto jawbone investors into believing they were finally ready toraise interest rates. Yet time and again, whether it was because ofBrexit,a slowing Chinese economy, or just lackluster growth at home, theylost their nerve.

The consequences have been significant. Not only have doubtsabout the Fed's resolve left traders convinced there's little morethan a 50-50 chance rates will rise at all in 2016 (policymakers began the year predicting four hikes). They've alsofueled a sense of complacency that has everyone from JeffreyGundlach to Bill Gross warning bonds are overvalued. But perhapsmost important of all is that the perceived loss of credibility hasleft the Fed with no good choices. Either raise rates now and riskblindsiding investors, or hold off longer and reinforce the viewit's at the mercy of the markets.