MUMBAI: Indian government bond yields were largely unchanged in the early session on Friday as market participants awaited a fresh supply of debt via the weekly bond auction later in the day.

The benchmark 10-year yield was at 7.0821% as of 10:00 a.m. IST, following its previous close of 7.0758%. New Delhi will sell bonds worth 310 billion rupees ($3.71 billion), which includes the 7.10% 2034 paper that will replace the existing benchmark bond soon.

“Auction cutoffs are expected to be the key trigger and till then we may see caution and also traders may not want to add more stock ahead of the long weekend,” a trader with a private bank said.

Indian markets will remain shut on Monday on account of voting in India’s financial capital Mumbai.

Traders were also cautious after the 10-year US yield moved off its recent lows, but continued to remain around the 4.35% mark.

US yields had dropped after US consumer price inflation cooled in April, boosting expectations that the Federal Reserve will cut interest rates twice this year.

Meanwhile, the government announced a third bond buyback for next week with a different choice of securities after the first two attempts were met with tepid response.

It has been able to buy back bonds worth only around 126 billion rupees, against one trillion rupees of the notified amount in the first two buybacks.

India bonds not reacting to strong domestic growth, yields little changed

Traders also continued to keep an eye on foreign inflows, after the recent selloff.

BlackRock Inc, the world’s largest fund manager, is looking to raise its share in the pool of fully investible government bonds via recently launched exchange traded funds (ETFs), a fixed income strategist at the firm said.

These bonds, which have been placed under a Fully Accessible Route (FAR) and have no foreign investment limits, will be included in JPMorgan’s emerging market debt index starting June.