MUMBAI: Indian government bond yields were largely unchanged in the early session on Wednesday, with the benchmark bond yield stuck near a key support level as the first quarter of the financial year neared its end.

The benchmark 7.26% 2033 bond yield was at 7.0604% as of 10:00 a.m. IST, after closing at 7.0611% in the previous session. Indian markets will remain shut on Thursday for Eid.

The financial quarter will end on June 30.

“There is no trigger at all for bonds to move either way.

Hence, the benchmark yield is expected to end the quarter around the key support level of 7.08%,“ a trader with a state-run bank said.

Bond yields have remained in a thin range, with the benchmark yield moving very close to the technical support level of 7.08%.

Market sentiment soured after hawkish commentaries from Indian and US central banks, which have pushed back rate-easing hopes.

Members of India’s rate-setting monetary policy committee appeared increasingly worried about inflation risks.

Indian bond yields seen steady at start of quarter’s last week

In June, the RBI kept its key lending rate steady for a second straight meeting but hinted at tightened monetary conditions for some time to hit its 4% inflation target.

Earlier this month, the US Federal Reserve kept interest rates unchanged but warned of a half-percentage point hike in 2023, while Fed Chair Jerome Powell said rates could go higher.

The odds of a rate hike in July stand at around 74%.

The spread between the two-year and 10-year US yield stayed around 100 basis points, with the shorter end, a closer indicator of interest rate expectations, remaining elevated.

Traders now await debt supply on Friday as New Delhi will raise 330 billion rupees ($4.03 billion) through the sale of bonds, which includes the benchmark note, while the RBI will auction treasury bills worth 320 billion rupees later in the day.