MUMBAI: Indian government bond yields were flattish in early session on Thursday, as focus was on the minutes of Reserve Bank of India’s February meeting amid a rise in US Treasury yields.

The benchmark Indian 10-year yield was at 7.0521% as of 10:00 a.m. IST, against its previous close of 7.0533%.

“The benchmark yield should consolidate around 7.05% today, and the next set of moves would be guided by the central bank’s commentary in the policy minutes, which could provide more insights on the interest rate trajectory,” a trader with a primary dealership said.

The minutes are due after market hours.

The Indian central bank had left rates and policy stance unchanged earlier this month while reiterating its commitment to meet its 4% inflation target on a sustainable basis.

India’s retail inflation eased to a three-month low of 5.10% in January, from 5.69% in December.

Traders also remain focused on the central bank’s liquidity management strategy, as the banking system continues to be in deficit, with banks’ borrowing through various repos at 3 trillion rupees (about $36 billion).

Rising foreign interest in long-duration India bonds nudges yields down

Traders are looking forward to the quantum of fund infusion through the 14-day repo, to be conducted on Friday, which would be crucial to gauge the liquidity stance of the central bank.

US bond yields rose on Wednesday, with the 10-year yield staying above the key 4.30% mark, threatening to hit fresh three-month highs after the Federal Reserve minutes.

The bulk of policymakers at the Fed’s January meeting said they needed “greater confidence” in falling inflation before considering cutting rates.

The odds of a Fed rate cut in May have tapered to 30% from 85% last month, according to the CME FedWatch tool.