MUMBAI: Indian government bond yields were largely unchanged at the start of the week, as traders remained curious about the timing of the central bank’s debt sale via auctions after it surprisingly raised the quantum of sales in the secondary market.

The 10-year benchmark bond yield was at 7.3591% as of 10:00 a.m. after ending at 7.3576% in the previous session.

The Reserve Bank of India (RBI) sold 41.75 billion rupees ($501.50 million) of government bonds on a net basis via screen-based trades in the secondary market in the week ended Oct. 20.

This was higher than the 7.80 billion rupees sold in the previous week, and also highest for any week since December 2022.

“These are slightly confusing signals, as some section or market has started believing that auction-based open market operations could be pushed back, if the central bank focuses on such screen-based sales,” a trader with a private bank said.

Indian bond yields inch higher, 10-year hits 7% tracking US peers

Earlier this month, RBI Governor Shaktikanta Das said the central bank aimed to sell bonds via auctions to suck out the liquidity surplus in the banking system.

While the market expects such sales of around 500 billion rupees in the current quarter, investors have been on the edge, unsure of when such sales may be held.

The market is looking for some clarity as the RBI is likely to meet senior officials from some banks on Nov. 2 and Nov. 3 to discuss the prevailing liquidity conditions.

On Oct. 20, Reuters reported citing two sources that the central bank will conduct open market sales of bonds once government spending picks up and there is an improvement in the durable liquidity surplus.

Meanwhile, the 10-year US bond yield stayed above the 4.85% mark, as traders awaited the Federal Reserve policy decision, due on Wednesday.

The Fed is expected to keep rates unchanged.

Commentary from Chair Jerome Powell will be key for further guidance.