MUMBAI, Sept 17 (Reuters) - Indian government bond

yields edged lower in early trade on Wednesday, tracking a

further drop in U.S. Treasury yields, as investors anticipated

dovish signals from the Federal Reserve later in the day.

The yield on the 10-year benchmark was at

6.4797% as of 10:00 a.m. IST, after ending at 6.4925% on

Tuesday.

"Looking at Treasuries as well as the rupee, confidence that

yields will have a meaningful decline has grown, prodding

traders to add fresh longs," trader with a state-run bank said.

The Fed's decision is due after Indian market hours, with a

25-basis-points cut already priced in and a slim chance of a

50-basis-points move.

"The key focus is likely on the Fed's forward guidance,

specifically whether the dot plot signals a faster pace of cuts

through the rest of 2025 and into 2026," MUFG said in a note.

"The updated Summary of Economic Projections will also shed

light on the Fed's expectations for growth, inflation, and

unemployment rate."

The odds of an aggregate of 75 bps of rate cuts from now

through December stand at 74%, according to the CME FedWatch

Tool.

Back home, traders await fresh debt supply as New Delhi

plans to sell 300 billion rupees ($3.42 billion) of benchmark

bonds on Friday, followed by the release of the second-half

borrowing calendar.

The Reserve Bank of India will also auction treasury bills

worth 210 billion rupees later in the day.

Bond traders have urged RBI to cut the share of ultra-long

bonds in the supply schedule for October-March.

RATES

India's overnight index swaps are expected dip tracking bond

yields, on anticipation of a dovish Fed.

The one-year OIS rate and the two-year OIS

rates were not yet traded, while the liquid

five-year OIS rate was lower at 5.69%.

($1 = 87.7570 Indian rupees)