AUSSIE BONDS: Cheaper With US Tsys, Dec-30 Supply Due

ACGBs (YM +0.5 & XM +0.5) are little changed after US tsys finished the NY session with modest gains.

• Lower-than-expected build permits outweighed higher-than-expected housing starts, while softer Canadian CPI aggregates added to support.
• Housing starts were far stronger than expected in July at 1428k (saar, cons 1297k) after an upward revised 1358k (initial 1321k) in June. It left starts rising 5.2% M/M (cons -1.8%) after a stronger than first thought 5.9% (initial 4.6%) as they bounced after a -8.3% M/M decline in May (also revised from -9.7%).
• Canadian all-items CPI rose 1.73% Y/Y unrounded (1.86% prior, 1.8% expected by MNI median), and 0.12% M/M (0.18% prior, 0.4% expected).
• Cash ACGBs are 1bp richer with the AU-US 10-year yield differential at +1bp.
• The bills strip is little changed.
• RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in September is given a 27% probability, with a cumulative 35bps of easing priced by year-end (based on an effective cash rate of 3.59%).
• Today, the local calendar will be empty.
• This week, the AOFM plans to sell A$1500mn of the 1.25% 21 May 2032 bond today and A$300mn of the 4.75% 21 June 2054 bond on Friday.

• MNI: UK MAY-JUL MEDIAN PAY AWARDS +3% :Brightmine

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.