India bond yields seen up as 10-year U.S. yield tops 3%

India bond yields seen up as 10-year U.S. yield tops 3%

MUMBAI, Aug 23 (Reuters) - Indian government bond yields are seen opening higher on Tuesday, as the 10-year U.S. Treasury yield crossed 3%, with supplies of state debt expected to further restrain appetite.

The benchmark 10-year government bond yield IN065432G=CC is likely to hover in a 7.25%-7.30% band, a trader with a private bank said. The yield has risen 9 basis points in last three sessions and ended at 7.2702% on Monday.

"There may be some selling pressure tracking U.S. Treasuries, but the benchmark bond yield should remain supported at around 7.30% levels," the trader said.

The 10-year U.S. yield rose above 3.00% mark for the first time in a month on Monday, as investors expect the Federal Reserve to reinforce commitment to tackle inflation by hiking rates.

Fed Chair Jerome Powell is scheduled to speak at the Jackson Hole symposium on Friday.

The U.S. Federal Reserve has hiked by 225 basis points since March of this year.

Indian states, meanwhile, are set to raise 68 billion rupees ($851.65 million)through sale of bonds on Tuesday. The quantum is sharply lower than 152 billion rupees as per schedule.

Market participants remain cautious after members of the Reserve Bank of India's monetary policy committee highlighted inflation concerns in minutes of rate setting meeting.

India's consumer inflation INCPIY=ECI dipped to 6.71% in July, easing for the third month in a row, but continues to remain above the RBI's mandated target band of 2-6% for a seventh straight month.

The RBI had raised the bank's key lending rate by 50 bps to 5.40%, its third increase in four months, to curb rising price pressure in August. The RBI has hiked repo rate by 140 basis points since May. KEY INDICATORS: ** Brent crude futures LCOc1 up 0.8% at $97.25 per barrel ** Ten-year U.S. note yield at 3.0201% ** RBI to auction state government bonds worth 68 billion rupees ($1 = 79.8450 Indian rupees)
Reporting by Dharamraj Lalit Dhutia; Editing by Neha Arora