MUMBAI: Indian government bond yields were largely unchanged on Wednesday, as traders awaited fresh cues including the government’s next steps to infuse liquidity in the banking system, after three attempts to buy back securities received lukewarm interest.

The 10-year benchmark bond yield was at 7.0294% as of 10:00 a.m. IST, following its previous close of 7.0351%, while the 7.18% 2033 bond yield was at 7.0727%, after ending at 7.0783% on Tuesday.

“At the current levels, there is hardly any room to add bullish bets, and hence we could see some sideway trades, with focus on what the government can do now to make use of the excess cash that it has,” a trader with a private bank said.

The government’s third consecutive attempt to infuse liquidity was undersubscribed on Tuesday.

The government has bought back securities totalling about 178.5 billion rupees ($2.15 billion) in May, against a targeted quantum of 1.60 trillion rupees. The government is open to buying back more bonds and cut borrowings through Treasury bills as part of its short-term cash management, a source familiar with the matter said on Tuesday.

Two other sources said spending was likely to remain slow until about August, when the new government settles in. The government has already slashed the supply of T-bills by 600 billion rupees till end of June.

India bond yields seen easing as government cuts T-bill supply

The government’s cash position is set to further improve as the central bank will transfer dividend after the end of its board meeting on Wednesday.

Traders expect the central bank to transfer around 750 billion rupees to over 1 trillion rupees as dividend.

Meanwhile, the 10-year US bond yield stayed above 4.40%, as investors waited for the minutes from the Federal Reserve’s latest policy meeting due later in the day for fresh clues on interest rates.