Government bond yields steady ahead of key US jobs data

Indian government bond yields were little changed in early trading on Thursday ahead of the crucial US non-farm payrolls data due a day later, which will help determine the quantum of rate cuts by the Federal Reserve.

The benchmark 10-year yield was at 6.8525 per cent as of 10:15 a.m. IST, compared with its previous close of 6.8579 per cent.

US Treasury yields declined on Wednesday after labour market data bolstered the case for a larger rate cut from the Federal Reserve later in the month.

"The next critical data points globally are US non-farm payroll, followed by inflation and then, Fed policy will take the center stage this month," said Anitha Rangan, an economist at Equirus Group.

The 10-year US yield was steady at 3.7646 per cent in Asian hours, while two-year yield was at 3.7683 per cent.

The closely watched yield curve between two-year and 10-year notes also briefly turned positive for the second time in a month indicating widening expectations of interest rate cuts data showed that US job openings dropped to over three-year low in July.

The Wednesday's data comes after weaker manufacturing print and ahead of the US non-farm payrolls data, which most believe would be the final trigger to move the needle in favour of a 25 or 50-basis-point move.

Markets are fully pricing in a rate cut of at least 25 bps at the Fed's meeting this month, with expectations for a 50 bps cut rising to 45 per cent from 30 per cent earlier this week.

On Friday, New Delhi will sell bonds worth Rs 29,000 crore ($3.45 billion), which includes liquid 15-year note.