MUMBAI, Jan 23 (Reuters) - Indian government bond yields were largely unchanged in early trade on Tuesday, as U.S. Treasury yields remained elevated, while the market awaited frequent supply in a holiday-truncated week.
India's benchmark 10-year yield was at 7.1674% as of 10:00 a.m. IST, following its previous close at 7.1790% on Friday. India's bond markets were shut on Monday and will be closed on Friday.
Indian states will sell 242.80 billion rupees ($2.92 billion) of bonds on Tuesday, the highest quantum in over two months.
The auction will be followed by a central government bond sale on Thursday in which New Delhi will raise 330 billion rupees, including 160 billion rupees from the benchmark paper.
"Local bond yields should remain around current levels through this week, while demand at auctions could provide some cues," a trader with a state-run bank said.
The 10-year U.S. bond yield stayed above 4.10%, as investors trimmed bets on the timing and pace of rate cuts by the Federal Reserve in 2024, following a slew of strong economic data in recent days.
Traders have trimmed the odds of the first Fed rate cut by March to 43% from 81% on Jan. 12, while the probability of 150 basis points of cuts in 2024 has dropped to 47% from 91%, according to the CME's FedWatch Tool.
The Fed's next policy decision is due on Jan. 31.
Meanwhile, India's federal budget for the next financial year is due on Feb. 1.
The Indian government will target reducing the fiscal deficit as a percentage of GDP to 5.30% in 2024-25, from 5.90% in the current year ending March 2024, as per a Reuters poll. ($1 = 83.1080 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala)
