MUMBAI: Indian government bond yields were largely unchanged in the early session on Tuesday as benchmark bond yield tracing closer to par levels limited selling, even as US yields rose further.

The 10-year benchmark 7.26% 2032 bond yield was at 7.2460% as of 10:00 a.m. IST, after ending at 7.2475% on Monday.

“For the benchmark, 100 rupees is a strong support zone, and hence unless there is very strong and fresh negative trigger, this level would be protected, and a bounce back is expected whenever we are close to that,” a trader with a state-run bank said.

Bond yields have remained largely rangebound after a sharp drop in the wake of a surprise pause from the Reserve Bank of India earlier this month. Market participants are now focused on the minutes of this meeting, due on Thursday.

The RBI had maintained its status quo on policy rates, against wide expectations of a 25 basis points hike. A dip in inflation has cemented bets that the central bank will now maintain a prolonged pause.

India’s retail inflation for March was at 5.66%, its lowest since December 2021.

Meanwhile, US yields rose further, with the 10-year yield hitting 3.60% and the two-year yield hovering around 4.20%, as investors watched US Federal Reserve speakers for any new guidance on the central bank’s rate trajectory after an expected increase in May.

India bond yields edge up, tracking US peers; RBI minutes awaited

Odds of a rate hike on May 3 have risen to around 86%, against around 70% last week, and he current target range is 4.75%-5.00%, up from near-zero last March.

Investors will also await central government debt sale due on Friday.

New Delhi will raise 330 billion rupees ($4.03 billion) via sale of bonds which includes the 7.26% 2033 bond, while Indian states will raise 75 billion rupees through sale of bonds later in the day.