Bond yields seen steady before key data, debt supply

Indian government bond yields are expected to open largely unchanged on Thursday as traders await key data points, as well as debt supply on Friday, for further directional cues.

The benchmark 10-year yield IN071034G=CC is likely to move between 6.85% and 6.88%, compared with its previous close of 6.8605%, a trader with a primary dealership said.

"As expected, bonds are expected to continue their sideway moves even today, and volume should remain low, but we can see some action tomorrow and major moves in the next week," the trader said.

U.S. growth data is due after Indian market hours on Thursday, and any signs of weakness would raise bets of a 50 basis point rate cut from the Federal Reserve in September.

This report would be followed by the personal consumption expenditures data on Friday, which is the Federal Reserve's preferred gauge to measure inflation.

Fed Chair Jerome Powell had last week delivered his strongest signal that interest rates will come down in September.

While a rate cut is certain next month, bets are split between a 25-basis-point and a 50-bp cut, with odds of the latter remaining around 35%. For 2024, markets are expecting cuts of just above 100 bps. FEDWATCH

Meanwhile, India's April-June growth data is due after market hours on Friday, and a Reuters poll expects gross domestic product (GDP) to have grown an annual 6.9%, down from 7.8% in the preceding quarter, due to lower government spending amid the national election.

The market will also await fresh debt supply as New Delhi will sell bonds worth 300 billion rupees ($3.58 billion) on Friday, including the benchmark bond worth 200 billion rupees.