Cheaper Ahead Of Lowe

The path of least resistance has been lower when it comes to early Sydney ACGB trade, with the major benchmarks trading 5-7bp cheaper across the curve, as the 7- to 15-Year sector leads the cheapening. YM & XM have shown below their respective overnight lows, but have lacked meaningful follow through thus far, with the former -5.0 and the latter -6.5. We would suggest that RBA Governor Lowe will not sound dovish when he speaks on inflation and monetary policy from the top of the hour, which, when coupled with the weakness observed in EGBS & Gilts on Monday, is likely biasing the space lower. EFPs are also a touch wider on the day, which suggests that payside flows in swaps may be aiding the cheapening. IR trade sees the strip running 2-7bp cheaper through the reds.