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Indian government bond yields dipped marginally in early trade on Wednesday, tracking US Treasury yields after soft retail sales data.
India's benchmark 10-year yield was at 6.9675 per cent as of 10:25 a.m. IST, following its previous close of 6.9789 per cent.
"For the benchmark bond yield to break the current 6.97 per cent-6.98 per cent zone, we will need something big," a trader with a primary dealership said.
US yields eased on Tuesday after data showed retail sales in the world's largest economy was weaker than expected in May, reinforcing expectations that the Federal Reserve is likely to start lowering interest rates this year.
Philadelphia Fed President Patrick Harker expects only one rate cut in 2024, as he sees slowing but above-trend economic growth, a modest rise in the unemployment rate, and a "long glide" back to target for inflation as his base case.
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The futures market is pricing in two rate cuts of 25 basis points (bps) each in 2024, even as the Fed slashed its forecast to only one 25 bps cut this year, down from three projected in March, according to the CME FedWatch tool.
Back home, traders are awaiting minutes from the Reserve Bank of India's (RBI) latest policy meeting, due on Friday, where the central bank had maintained status quo on rates and its stance.
India should avoid "adventurism" and continue to focus on bringing down inflation towards the target of 4 per cent despite a growing clamour to signal a pivot in monetary policy, RBI Governor Shaktikanta Das said on Tuesday.
