MUMBAI: Indian government bond yields were expected to open largely unchanged on Monday, as traders waited for local retail inflation data, while higher US yields also added to caution.

The benchmark 10-year yield was likely to move in a 7.27%-7.33% band, a trader with a private bank said.

The yield ended higher at 7.2982% on Friday after rising 8 basis points last week, its biggest such move since the week ended Sept. 23.

India’s consumer price inflation likely cooled to a nine-month low of 6.40% in November, according to a Reuters poll of economists, helped by a moderation in food prices.

The data for November is due post market hours later in the day, coming after the October reading stood at 6.77%.

Inflation in the country has stayed above the Reserve Bank of India’s tolerance range of 2%-6% for 10 straight months, prompting the RBI to raise repo rate by 35 basis points to 6.25% last week, its fifth consecutive hike.

Domestic inflation data would be followed by US inflation data on Tuesday and the Federal Reserve policy decision on Wednesday.

The Fed is expected to hike its interest rate by 50 basis points, after raising the same by 375 bps since March.

The 10-year U.S yield rose on Friday after data showed US monthly producer prices came in higher than expected for November and consumer sentiment improved, suggesting interest rates will remain higher for longer.

Benchmark bond yield above 7.30% ahead of debt auction

Meanwhile, India’s fixed income investors should opt for three-year to five-year government bonds and sell debt with longer tenors at current levels, Pankaj Pathak, fund manager – fixed income at Quantum Mutual Fund.

“The three-year to five-year bonds are being preferred and we still do not find duration (long-term bonds) playing any major role in the current investment horizon.”