Who could have seen this coming? US mortage applications tumbled 7.4% in the prior week - the biggest drop since 2016 - as mortgage rates rose to two-month highs following the Fed's rate-hike and hawkish jawboning.
The big driver was refis which fell 13% WoW and a stunning 57% year-over-year - the biggest plunge since the taper tantrum.
All data above adjusted for July 4th holiday.
Fed Chair Yellen will be testifying to the House Financial Services committee at 1000EDT, followed by testimony tomorrow before the Senate Banking Committee (the testimony for both events is likely to be identical, as it has on previous occasions), however her prepared remarks will be released 90 minutes earlier, at 8:30am. Courtesy of RanSquawk, here are the main things to look for in her prepared testimony as well the subsequent Q&A.
By Yra Harris from Notes From Underground
Brainard Delivers a Very Significant Speech
In its just released lastest market report for the month of July, OPEC admitted it has a problem: more than six months after the Vienna deal that was supposed to bring supply and demand in balance, the oil cartel confirmed it is pumping too much, not only in 2017, but also in 2018, blaming shale production as the primary reason behind the oversupply.
The dollar was broadly weaker after dovish comments from Fed Governor Lael Brainard amid reverberations from reports of Donald Trump Jr.’s contact with a Russian lawyer; European equities rebounded with oil while S&P futures were 0.2% higher at 2,428; Treasury yields are 1-2bps lower across the curve with the 10y at 2.346% ahead of Yellen’s much anticipated testimony this morning (House today, Senate tomorrow) for further clues on the trajectory of monetary policy while the Bank of Canada is expected to hike rates later.