MUMBAI: Indian government bond yields are expected to trade largely unchanged on Tuesday ahead of a holiday and as traders continue to await fresh triggers locally and globally.

The benchmark 10-year bond yield is likely to move between 6.79% and 6.83%, compared with the previous close of 6.8181%, according to a trader with a state-run bank.

Indian markets are shut on Wednesday for a regional election.

“Market participants are looking for cues, which, at the moment, are not available and for the week, we do not expect any major move in rates or pick up in volumes,” the trader said.

Bond yields witnessed an uptick recently as US Treasury yields stayed higher on easing bets of an interest rate cut by the Federal Reserve next month.

The odds of a Fed rate reduction in December had risen after last week’s inflation reading came in line with estimates.

However, traders have now assigned only a 58% chance of a Fed rate cut next month, down from 77% last month, according to the CME FedWatch tool, following Donald Trump’s Presidential election win as his policies are expected to raise inflation as well as fiscal deficit.

Elevated inflation reading in India in which consumer prices accelerated to 6.21% in October, breaching the Reserve Bank of India’s target range of 2%-6% for the first time in 14 months has also weighed on sentiment.

Most market participants are not expecting the authority to cut rates in December, while swap markets have priced out the February rate cut as well.

India’s 10-year bond yield hits 31-month low; traders eye debt supply

Still, any rise in yields is unlikely as demand-supply conditions remain favourable, with states set to borrow 93.49 billion rupees ($1.11 billion), sharply lower than the target of 297.38 billion rupees, via the sale of bonds.

This is the fifth consecutive week that states will borrow lower-than-earmarked amounts through debt sales.