MUMBAI: Indian government bond yields were largely unchanged on Friday after tracking US yields lower in early trade, as traders await fresh debt supply through the weekly auction.

The benchmark 10-year yield was at 6.9915% as of 9:55 a.m. IST, following its previous close of 6.9966%.

“At the current levels, traders want to assess fresh demand at the auction, and hence the early rally has seen a pause,” trader with a primary dealership said.

New Delhi will raise 290 billion rupees ($3.48 billion) through the sale of bonds later in the day and the auction includes a new five-year paper worth 120 billion rupees.

US yields eased after data showed the world’s largest economy grew slower than estimated in the first quarter as consumer spending was revised lower, suggesting the Federal Reserve has scope to cut interest rates later this year.

Gross domestic product grew at a 1.3% annualised rate, down from the advance estimate of 1.6% and notably slower than the 3.4% pace in the final three months of 2023.

Bets of a rate cut in September improved marginally to 51% from 47% before the data, according to the CME FedWatch Tool.

Back home, the central government has bought back bonds worth an aggregate of around 230 billion rupees this month, and cut the supply of Treasury Bills by 600 billion rupees till the end of June, amid strong cash position.

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

Traders await the result of the general election due on Tuesday, followed by the Reserve Bank of India’s monetary policy decision on Friday.

The RBI will cut interest rates just once this year, most likely in October-December rather than next quarter, although there was no clear majority among economists polled by Reuters on the timing of the first move.