MUMBAI, May 10 (Reuters) - Indian government bond yields dipped in early trading on Friday, tracking a similar movement in their U.S. peers, ahead of the weekly debt auction.
The benchmark 10-year yield was at 7.1142% as of 10:25 a.m. IST, following its previous close of 7.1321%.
New Delhi aims to raise 200 billion rupees ($2.40 billion) through the sale of 2030 and 2053 bonds during the day.
U.S. Treasury yields fell on Thursday ahead of inflation reports that are pivotal for the Federal Reserve's higher-for-longer rate strategy.
The benchmark 10-year note yield was last at 4.4610% in Asian hours.
Yields have been on a declining trajectory since last Friday when April U.S. non-farm payrolls came in below expectations, raising the odds of Fed rate cuts.
Traders are pricing in the probability of two 25-basis-point cuts this year, with the first expected in September.
Meanwhile, market participants will also see if the Indian government announces another round of bond buybacks as the banking system's liquidity continues to stay in deficit.
The government's assessment on this count comes after the central bank accepted offers to buy back government bonds worth 105.10 billion rupees at an auction on Thursday, against the notified amount of 400 billion rupees.
The local as well as U.S. inflation prints, due next week, are expected to provide directional cues to bond yields.
India's consumer price inflation is likely to have eased to 4.80% in April, just shy of March's rate as food inflation remains sticky, according to economists polled by Reuters.
The Reserve Bank of India kept the lending rate steady for the seventh consecutive meeting in April as growth was seen staying robust while inflation has remained above its 4% target. ($1 = 83.4825 Indian rupees) (Reporting by Bhakti Tambe; Editing by Savio D'Souza)
