MUMBAI, April 3 (Reuters) - Indian government bond yields traded sideways on Wednesday, as a jump in the previous session attracted bargain hunters, even as elevated Treasury yields remained an overhang.
The yield on the benchmark 10-year was at 7.1100% as of 10:00 a.m. IST, following its previous close of 7.1160%, which was the highest in more than two months.
"As the benchmark yield is around 7.10%-7.11%, there may be some consolidation, and we may not see any major spike for now," a trader with a state-run bank said.
U.S. bond yields continued their upward momentum, as a recent run of solid economic data has led to concerns over the timing and quantum of rate cuts by the Federal Reserve in 2024.
The 10-year U.S. yield rose above 4.40% mark for the first time in four months on Tuesday, and was around 4.35% in Asian trading hours.
A constant rise in oil prices is also weighing on investor sentiment, as it could have a direct impact on local inflation. India is one of the largest importers of the commodity.
The benchmark Brent crude contract was around $89 per barrel as a larger than expected fall in U.S. crude inventories and escalating geopolitical tensions raised supply worries.
The Reserve Bank of India will deliver its first monetary policy decision of this financial year on Friday, with expectations of a status quo, while commentary on liquidity as well as inflation management will be crucial triggers.
Bond market sentiment has been impacted as the central bank is moving to multiple price-based auctions after nearly three years.
The government will raise 380 billion rupees ($4.56 billion) via a bond auction on Friday to kickstart its borrowing programme for the financial year that started April 1. This includes 200 billion rupees of a new 10-year bond. ($1 = 83.3850 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala)
