Does anyone out there still think that interest rates are coming down anytime soon. Forget it, inflation is still running around out there. The latest bad news came from wholesale prices, which screamed ahead in May. The monthly increase was 0.9 percent. That is almost a full percentage point increase in just one month. A few more months like May, and the US will have something like double digit inflation.

Bernanke and the gang must have needed a toilet break when they heard about these numbers. To put it mildly, the Fed must have a few concerns about continuing inflation risks. The question is whether they have the backbone to put in anothe rate rate. The economy certainly needs one.

The bond market knows what to do, even if the Fed has lost the plot. The data sent US government bond yields back up to near five-year highs. The benchmark US Treasury 10-year bond yield rose to 5.23% after the US report was released, continuing their recent upward trend.