European troubles continue; NY Fed report shows manufacturing slowing over next six months.

Concern over the European credit crisis continues to grow. Analysts predict the Eurodollar will drop under $1.16 per Euro. These levels have not been seen since November 2005. Heavy buying of treasuries is expanding as investors fear the worst in Europe.

Now to the US economy, where there is an overall consensus we are in some type of recovery. Even GM reported a profit this morning. Last week's news confirmed that: the trade numbers showed growth, retail sales were up, industrial production and capacity utilization were up, and initial jobless claims were down. On Friday, bond prices improved and rates dropped, primarily based on continued European problems. These problems are not going to go away any time soon, so look for more volatility.

Can 30-yr rates reach 4.75% - enough to attract refi attention? Increasing volatility and lower rates is an interesting situation, as are rising gold prices, the rising dollar, and declining oil prices. Mortgage rates have definitely lagged Treasury rates as yields head down.