The latest mortgage run toward 7 percent has stalled ("retreat" is too strong) because of yesterday's shift in one Federal Reserve phrase: on May 10 economic growth was "likely to moderate"; but as of yesterday, "growth is moderating." If so, then the inflation threat will also moderate, though with a lag of several uneasy months. The bond market will lurch in response to each new report: next Friday's June payroll numbers could as easily contradict the Fed as confirm a slowdown, or surprise everyone by showing deep weakness that no one expects. The core personal income deflator this morning was up 2.1 percent year-over year, out of bounds but not accelerating. Not one bit reassuring that the Fed has it right: since the meeting oil has run to $74, and gold blew up $25 to $614. Stocks...
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