Indian government bond yields were little changed on Tuesday after a record state debt issuance went through without any major disruption, while focus shifted to the Federal Reserve's interest rate decision and guidance on Wednesday.

The benchmark 10-year yield ended at 7.0981%, following its previous close of 7.0871%.

"While the momentum is clearly on the downside for benchmark yield, near term challenges exist with surging U.S. Treasury yields and consistently strong data, coupled with a surge in oil prices, putting pressure on government bonds," PNB Gilts said.

The Fed will announce its monetary policy decision after Indian market hours on Wednesday, and it comes on the back of data which highlighted resilience in the economy and elevated inflationary pressures.

While no rate action is expected, traders would keenly await guidance on the timing and magnitude of rate cuts in 2024, with many fearing that Fed members may reduce their expectations to two cuts from three in their updated dot plot projections.

As a result, U.S. bond yields continue to remain elevated, with the 10-year yield posting its sixth straight rise on Monday. It has jumped 25 basis points over the past six sessions.

The odds of a rate cut in June have eased below 60% from around 70% a week ago, according to CME FedWatch tool.

Consistent rise in oil prices is acting as another bearish factor, as it could seep into domestic retail inflation and keep the reading away from the Reserve Bank of India's 4% target.

Still, the upside in yields continues to remain capped, as pick up in secondary market bond purchases from state-run banks, overall strong demand from foreign investors and favourable demand-supply outlook support sentiment. ($1 = 82.9900 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Varun H K)