By Dharamraj Dhutia
MUMBAI, Nov 1 (Reuters) - Indian government bond yields are likely to trade largely unchanged in early trades on Wednesday, as the market awaits the U.S. Federal Reserve's monetary policy decision later in the day.
The 10-year benchmark bond yield is expected to be in the 7.34%-7.38% range, after ending at 7.3558% in the previous session, a trader with a private bank said.
A rise in U.S. Treasury yields before the decision may slightly weigh on investor sentiment.
The 10-year U.S. yield rose above the 4.90% mark, with a major focus on the commentary from Fed Chair Jerome Powell. The market expects no change in the interest rates in November, while there is a 25% probability of a hike in December.
Markets will also be interested to see how much Powell's assessment has changed since the Israel-Hamas war, DBS said in a note.
"We do not expect any major change in trading trend as observed in the last few days, and yields should be in a very narrow range," the trader said.
Indian benchmark bond yield has moved in a narrow 7.30%-7.39% range over the last 12 trading sessions as traders largely stayed on the sidelines.
Bond yields ended higher in October, after the Reserve Bank of India (RBI) shocked the market with its plan to sell bonds via auctions and U.S. yields rose for the sixth consecutive month.
While the market expects around 500 billion rupees of such sales this quarter, investors are unsure of when they might begin, especially as the RBI has stepped up bond sales via screen-based trades.
Meanwhile, oil prices eased, with the benchmark Brent crude oil contract trading around $85 per barrel mark, as markets worried less about potential supply disruptions from the Middle East conflict and on data showing rising output from OPEC and the U.S. KEY INDICATORS: ** Brent crude futures down 2.5% at $85.20 per barrel after easing 0.1% in previous session ** 10-year U.S. Treasury yield at 4.9222%, two-year yield at 5.0811% ** RBI to auction Treasury bills worth 240 billion rupees ($2.88 billion) ($1 = 83.2600 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)