MUMBAI: Indian government bond yields are likely to be little changed in early trading on Thursday as traders await the latest print on India’s economic growth, although yields are for a fourth consecutive monthly decline.

The benchmark 10-year yield is expected to hover in a 7.05%-7.09% range, following its previous close of 7.0663%, a trader with a private bank said.

“Volumes have gone down drastically since the last few days, as traders are desperately searching some fresh triggers. May be, growth data could provide some impetus if there is any major deviation from expectations on either side,” the trader said.

Indian bond traders await fresh cues, yields move sideways

India’s economic growth likely moderated to 6.6% year-on-year in the October-December quarter as government spending slowed and growth in the agriculture sector remained muted, a Reuters poll showed. The data is due after market hours on Thursday.

Asia’s third-largest economy grew 7.8% and 7.6% in the first two quarters of the current fiscal year.

India’s economy is expected to grow 7.3% in this year, giving comfort to the Reserve Bank of India which has held policy rate steady as it aims to meet its 4% inflation target on a sustainable basis.

After the central bank’s pause and accompanied commentary earlier in February, market participants have pushed back rate cut expectations to third quarter of the next fiscal year.

Meanwhile, US Treasury yields remained elevated, with the 10-year yield in 4.25%-4.30% range, with the odds of a cut in May easing to 20% from around 32% last week and 88% last month, according to the CME FedWatch tool.

Market participants will also continue to focus on liquidity management as government spending has improved cash conditions, pushing average overnight rate below repo rate on Wednesday, forcing the RBI to conduct back-to-back overnight variable rate reverse repos.