MUMBAI: Indian government bond yields were little changed in the early session on Tuesday as traders awaited a fresh supply of debt through states, while not reacting much to yet another spike in US peers.

India’s benchmark 10-year yield was at 7.0953% as of 10:00 a.m. IST, following its previous close of 7.0968%. Thirteen Indian states aim to raise 302 billion rupees ($3.64 billion) through the sale of bonds later in the day.

The quantum, though lower than scheduled, is the highest since the end of November and may test investor appetite.

The auction comes after the central government completed its planned borrowing for the current financial year, with long-term investors continuing to receive more inflows.

“Investors are bullish and with no more supply from the centre, it would take a major negative trigger for the benchmark yield to break the 7.12% mark,” a trader with a private bank said, adding he expected yields to remain in a narrow range this week.

Meanwhile, US yields climbed further after economic data showed producer prices increased more than expected in January, which further dented bets of an immediate rate cut from the Federal Reserve.

India bond yields dip marginally, focus stays on debt auction

The 10-year US yield was above the 4.30% mark and threatening to surpass its recent highs, while the odds of a rate cut by the Fed in May went down to 30%, down from 61% last week, according to the CME FedWatch tool.

Along with the Fed, local market participants have also pushed back easing hopes from the Reserve Bank of India to the third quarter of the next financial year.

The RBI left interest rates and the policy stance unchanged earlier in the month while reiterating its commitment to meeting the 4% inflation target on a sustainable basis.

The minutes of this meeting are due this week and would act as a key trigger amid lack of any other major cues.