Next stop: 7% mortgage rates

Economy has soft spots, but corporate earnings tell different story

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Last week’s hopes for a mortgage-rate top are still valid, but the location may be closer to low sevens than high sixes. The latest over-target inflation report (May CPI core plus .3 percent) will likely force the Fed from 5 percent to 5.25 percent on June 29, and short-term Treasurys are beginning to price a 5.5 percent Fed in August.

The Fed must proceed until the economy slows substantially, but the global unwinding of stock markets that began two weeks ago caused bonds to get ahead of themselves.