EU FINANCIALS: Financials - Week in Review

Chancellor of the Exchequer Rachel Reeves concludes the Spending Review with two notable announcements on areas of investment. 

• On education Reeves confirms "Overall, I am providing a cash uplift of over £4.5bn a year of additional funding for the core schools budget by the end of the spending review;...am providing investment rising to nearly £2.3bn per year to fix our crumbling classrooms, As well as £2.4bn per year to continue our programme to rebuild 500 schools"
• On healthcare: "...we are investing £10bn to bring our analogue health system into the digital age...I am proud to announce today that this Labour Government is making a record cash investment in our NHS... ... increasing real-terms, day to day spending by 3% per year for every year of this spending review. An extra £29bn per year for the day to day running of the health service."
• For the second time, Reeves comments on policies from Reform UK, claiming the right-wing populists back an 'insurance-based' healthcare system. It remains very unusual for the gov't to take so much time to criticise policies from a relatively small party, compared to the main opposition. 

Weekly MBA mortgage applications jumped 12.5% W/W in the Jun 6 week, fully reversing the 3.9% drop a week earlier. That jump moves the composite index back to levels it hasn't seen since early April, after which rising mortgage rates dampened demand.

• Refis led the way with a 15.6% W/W jump, the first rise since the start of May, to a 4-week high SA level (though still just 40% of 2019 activity). Purchases also jumped though, by 10.3% W/W, reversing the declines of April (though just 66% of 2019 levels).
• While activity across the board remains weak, it increasingly looks like it has bottomed out.
• The sudden jump doesn't appear to be triggered by mortgage rate falls, as has been the case in previous rises in activity (particularly for refi): 30Y conforming rates remain off the recent 6.98% peak, at 6.93% in the Jun 6 week, with Jumbos at the same level, up 1bp from the prior week.
• At a stretch we would venture that some tentative mortgagors are attempting to head off any future yield increases at a time of significant uncertainty, though again, activity overall remains moribund.

Delivering the Spending Review, Chancellor of the Exchequer Rachel Reeves confirms reforms to the 'green book', which indicates how the Treasury calculates the 'value' of gov't investment. Reeves: "I am today publishing the conclusion of the review of the Treasury’s Green book, the government’s manual for assessing value for money. Our new Green Book will support place-based business cases and make sure no region has Treasury guidance wielded against them."

• Reeves: "This spending review provides the largest settlements in real terms since devolution was introduced: With £52bn for Scotland; £20bn for Northern Ireland, by the end of the spending review period; And £23bn for Wales."
• Confirms extension of GBP3 bus fare cap until at least March 2027.
• Reeves on crime and policing: "we are investing £7bn to fund 14,000 new prison places... …and putting up to £700m per year into reform of the probation system. Today, I will do more. I am increasing police spending power by an average 2.3% per year in real terms over the spending review period… "