UK DATA: Brightmine Pay Deals Stay At 3.0%, Upper Quartile Falls to Cycle Low
Brightmine median pay awards in the 3 months to July remained at 3.0% for the eighth consecutive rolling quarter. While the BoE and analysts expect inflation to egde up in July's print and to peak even higher in September and hence remaining sticky, CPI is still some way off the levels seen over the past few years. The press release again points to employers remaining cautious in the face of uncertainty and the upcoming Autumn Budget.
- The press release notes that 78.9% of 2025 deals are lower than the settlement reached in 2024. "This reflects the high pay awards recorded in 2024, while organisations have chosen to introduce more muted pay rises this year."
- The interquartile range for pay deals decreased to around 0.6 ppts, owing to a drop in the upper quartile to 3.1% vs 3.6% in June, potentially signalling a lower and more stable rate of pay growth going forward - particularly compared to last year. There was a notable uptick for the upper quartile between April and June, likely driven by the increases in the minimum and National Living Wage which have dropped out of the current quarter.
- The lower quartile remains constant at around 2.4%.
- The May-Jul data was based on pay awards between 1 May and 31 July 2025, covering pay review outcomes for over 600,000 employees.
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BONDS: Market Richer After CPI Miss, 80% Priced For Aug Cut
In local morning trade, NZGBs are 2bps richer on the day and after today’s Q2 CPI data.
- NZ CPI rose less than economists expected in Q2. Headline CPI rose 0.5% q/q 2.7% y/y (estimate +0.6% and 2.8%). Tradeables rose 0.3% q/q, less than forecast, while non-tradeables were in line at 0.7% q/q.
- (Bloomberg) “The central bank paused its interest-rate cuts earlier this month, holding the Official Cash Rate at 3.25% to assess the uptick in inflation, but said it will resume easing if price pressures abate as expected. Economists predict at least one further quarter-point reduction in the OCR this year as the economy’s recovery from last year’s recession shows signs of stalling in the face of global uncertainty.”
- On Friday, US tsys finished moderately richer, with a slight steepening bias.
- Swap rates are 2-3bps lower.
- RBNZ-dated OIS pricing is softer across meetings following today’s CPI data. At the time of writing, 20bps of easing is priced for August, with a cumulative 34bps by November 2025 versus 16bps and 30bps before the data.
OIL: EU Increases Sanctions Against Russian Fuel
Oil prices were off their intraday high to finish Friday slightly lower. The EU announced further restrictions against Russian fossil fuel including refined products as its war against Ukraine continues.
- WTI fell 0.4% to $67.30/bbl after reaching $68.96 earlier before falling to $67.20. It was down 1.7% last week but still up 3.4% in July. It has started today slightly higher at $67.54/bbl. Initial resistance is at $71.20, while support is at $65.92, 30 June low.
- Brent was also 0.4% lower at $69.23/bbl to be down 1.4% on the week but up 4% on the month. It rose to $70.77 and then fell to $69.14 as US President Trump said that he wanted 15-20% tariffs on imports from the EU. The bearish theme persists with initial support at $65.92. Initial resistance is at $72.66, 50% of the June 23-30 range.
- The EU announced a reduction in the price cap for Russian crude and further targeting of its shadow fleet as well as another 20 banks losing access to the global payments system SWIFT. Importantly, there will now be limitations on third country refined products from Russian crude, which will impact India who is a large exporter of refined fuel to Europe. This move is likely to impact the already tight diesel market, according to Bloomberg.
NZD: NZ CPI Reaction
The NZ CPI has printed 2.7%, EST 2.8%. NZD/USD went into the announcement trading around 0.5965 and has dropped 20bps in reaction, the NZX50 went in up 0.20% at 12905. NZD/USD is under a little pressure post the print.
- NZDUSD - 0.5943, -0.322%
- AUD/NZD - 1.0945, +0.24%
- NZD/JPY - 88.30, - 0.55%
- NZX50 - 12896, +0.13%%
