MUMBAI: Indian government bond yields fell in early trade on Tuesday, tracking their US peers, while the broader market focus stayed on key economic events including the Federal Reserve’s policy decision and India’s federal budget.

India’s benchmark 10-year yield was at 7.1588% as of 10:00 a.m. IST, following its previous close at 7.1735%.

“There could be some bullish bias today as Treasury yields have softened a bit, but we do not expect any major directional change until the budget announcement is out of the way,” a trader with a private bank said.

US yields eased on Monday and continued to trend lower in Asian hours on Tuesday after the Treasury Department said it would need to borrow less than its previous estimates.

The 10-year yield was around 4.06%, with the focus now on the Fed’s policy decision, which is due just before India’s budget announcement on Thursday.

Markets have trimmed their bets on the timing and pace of Fed rate cuts in 2024.

The odds of a cut in March now stand at around 46%, down from 88% last month, according to the CME’s FedWatch Tool.

Meanwhile, India is due to announce the budget for the next financial year. The government may keep its gross market borrowing for 2024/25 close to the current fiscal year’s level, two sources told Reuters.

India bond yields flat as traders eye Fed meet, Union Budget

India may target gross borrowing for the next financial year at between 15 trillion rupees ($180.43 billion) and 15.50 trillion rupees, against a planned 15.43 trillion rupees this fiscal year.

According to a Reuters poll, the fiscal deficit as a percentage of GDP is expected to decline to 5.30% in 2024/25 from 5.90% this fiscal, with a projected gross borrowing of 15.60 trillion rupees.

Separately, traders are also eyeing a fresh supply of debt as Indian states aim to raise 262.11 billion rupees via a sale of bonds later in the day.