Indian government bonds remained largely unchanged in early trading on Tuesday, as investors awaited monetary cues from the state debt sale later in the day and the U.S. Federal Reserve’s policy decision scheduled for Wednesday.

The benchmark 10-year bond (IN063335G=CC) was trading at a yield of 6.5418% at 10:00 a.m. IST, slightly below Monday’s closing of 6.5464%, which was the highest closing in a month. Bond yields move inversely to prices.

On Tuesday, Indian states are set to raise ₹178 billion ($2.03 billion) through bond sales, significantly lower than the previously planned ₹309 billion. Market participants expect low trading volumes for the day, with little likelihood of a sharp breakout in either direction. While the 10-year yield is close to the key 6.55%-6.56% level, traders do not anticipate an immediate breach.

Last week’s position cutting and short selling continued into Monday amid optimism that a US-India trade deal could reduce U.S. tariffs by up to 50% on Indian goods. Such a move could marginally influence India’s growth trajectory, potentially limiting the scope for future rate cuts.

According to a Reuters poll, India’s economy is expected to grow slightly faster than earlier projected, with GDP growth around 6.7% for the fiscal year. The Reserve Bank of India had previously indicated the possibility of a repo rate cut in December, following a total of 100 basis points of reductions in 2025.

Overnight index swap (OIS) rates also remained stable, tracking bond yields and awaiting fresh triggers.