MUMBAI: Indian government bond yields were lower in the early session on Thursday following a slump in US peers as weak economic data in the world’s largest economy strengthened bets of interest rate cuts.

The benchmark 10-year yield was at 6.9934% as of 10:00 a.m. IST, following its previous close at 6.9987%.

“The downward move in US Treasury yields has led to some positive move in local bonds and the benchmark should remain a tad below the 7% handle for today and tomorrow,” a trader with a primary dealership said.

Any further decline, however, was unlikely as the market awaited debt supply on Friday, with New Delhi aiming to raise 280 billion rupees ($3.35 billion).

The benchmark 10-year US yield fell to 4.35% on Wednesday, as growing signs of weakness in manufacturing and the jobs market suggested the economy was slowing.

The ISM non-manufacturing index was 48.8 in June, well below the 52.5 consensus and the 53.8 level in May.

Initial unemployment claims rose to 238,000 in the week ended June 29, slightly above expectations of 235,000, while private payrolls rose by 150,000 jobs in June, below the consensus of an increase of 160,000.

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

Despite the Federal Reserve having cut its rate cut forecast to 25 basis points in 2024, investors continued to anticipate 48 bps of cuts with a 67.5% chance of easing in September, according to the CME FedWatch tool.

In the minutes of the June meeting released on Wednesday, the members acknowledged the economy was slowing and price pressures were diminishing but opted to wait before committing to rate cuts.

Locally, investors awaited fresh direction cues, especially after foreign inflows remained tepid since the debt got included in the JPMorgan index on June 28.