(Reuters) - India's government bond yields were largely unchanged on Wednesday, with market participants avoiding large positions ahead of the minutes of the U.S. Federal Reserve's last meeting, which is due later in the day.
The benchmark 10-year government bond yield ended at 7.2910% versus its close of 7.2852% on Tuesday. "Enough Fed governors have given hawkish comments over the past few days. The market knows that the rate hike cycle is not going to stop," said Dwijendra Srivastava, chief investment officer-debt at Sundaram Mutual Fund.
"But what we are looking for from Fed minutes are the cues for where future interest rates are going to be. I think the momentum of Fed rate hikes will slow down as we are seeing with most other central banks as well," he added.
Fed has raised rates by 75 basis points (bps) in its last four meetings but slowing inflation in the U.S. has eased fears of more aggressive rate hikes going ahead.
Market activity in India was largely sluggish as most investors refrained from taking large positions and remained on the sidelines, a trader with a private bank said.
A fund manager at Axis Mutual Fund has recommended investors with a shorter duration horizon opt for two-to-three-year bonds in the near term as risks at the longer end persist.
Over the next week, market participants expect yields to trade in a range of 7.25%-7.33%. The yields will find support at 7.35%, traders said.
