MUMBAI, May 7 (Reuters) - Indian government bond yields were largely unchanged in the early session on Tuesday, with the benchmark yield at around 7.10% levels, as the recent fall in yields prompted profit booking, while U.S. peers remained flattish.
The benchmark 10-year yield was at 7.1102% as of 10:00 a.m. IST, following its previous close of 7.1068% - its lowest closing level since April 4.
"The 7.10%-7.11% zone is seeing a lot of offers, especially from state-run banks, and we could see some reversal during the week if there are no supportive additional positive indicators," a trader with a private bank said.
State-run banks continue to cut positions, after remaining heavy buyers in the previous month when yields were rising, traders said.
Bond yields have declined over the last few days, tracking a similar move in U.S. yields, and as the government announced a surprise buyback of bonds worth 400 billion rupees ($4.79 billion), due on Thursday, which will infuse liquidity.
The buyback of securities is a liquidity injecting tool, and will help in easing liquidity in the system, a source familiar with the government's thinking said.
U.S. Treasury yields remained largely unchanged, with the 10-year yield anchored around the 4.50% mark, as investors digested Friday's data showing non-farm payrolls rose by 175,000 jobs in April, below estimates of 243,000.
The data has validated the Federal Reserve's suggestion that the economy was not overheated and it could embark on its rate easing cycle in 2024. Futures are now pricing 44 basis points of rate cuts in 2024, according to the LSEG's rate probability app.
Meanwhile, Indian states aim to raise 99 billion rupees later in the day, while New Delhi will raise 200 billion rupees through the sale of bonds on Friday. ($1 = 83.4700 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)
