Govt bond yields largely unchanged as traders await fresh debt supply

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 per cent as of 9:55 a.m. IST, following its previous close of 6.9966 per cent.
 

"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 Rs 29,000 crore ($3.48 billion) through the sale of bonds later in the day and the auction includes a new five-year paper worth Rs 12,000 crore.
 

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 per cent annualised rate, down from the advance estimate of 1.6 per cent and notably slower than the 3.4 per cent pace in the final three months of 2023.
 

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

Back home, the central government has bought back bonds worth an aggregate of around Rs 23,000 crore this month, and cut the supply of Treasury Bills by Rs 60,000 crore till the end of June, amid strong cash position.
 

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.