MUMBAI: Indian government bond yields are expected to edge lower in opening trades at the start of a new week, after US bond yields continued their downward slide Friday as latest data and commentary kept the possibility of a June rate cut by the Federal Reserve alive.

The benchmark 10-year yield is expected to drift in the 7.01%-7.05% range on Monday, following its previous close of 7.0548%, a trader with a private bank said.

“There could be an attempt to take the benchmark bond yield towards 7%, as the correction in the 10-year US yield has been sharp,” the trader said.

“However, the break of 7% is still not on the cards yet.”

US bond yields fell further, with the 10-year yield declining to its lowest level in five weeks on Friday, after data showed employers added more jobs than anticipated in February, though unemployment rate also moved higher.

Nonfarm payrolls increased by 275,000 jobs last month, above economists’ expectations for 200,000 jobs gains, but the unemployment rate rose to 3.9% in February after holding at 3.7% for three straight months, and average hourly earnings edged up 0.1% last month after gaining 0.5% in January.

Indian bond yields seen easing as US peers fall further

The data comes after Fed Chair Jerome Powell said that the US central bank still expects to reduce rates later this year.

The odds for a rate cut in May have stayed around 25%, while that for one in June stand at around 75%, according to the CME FedWatch tool.

For this week, traders await inflation prints in India and the US India’s consumer price inflation is forecast to have edged down to a four-month low of 5.02% in February on moderating food price increases, according to a Reuters poll of economists.