MUMBAI: Indian government bond yields inched lower in early trading on Wednesday as US yields retreated, with focus shifting to inflation data in the world’s largest economy for insights on the interest rate outlook.

The benchmark 10-year yield was at 7.1208% as of 10:00 a.m. IST, after closing at 7.1501% in the previous session, the highest closing level since Jan. 31.

India’s financial markets will be closed on Thursday for a holiday.

“There is some relief from the selling pressure that we witnessed over last few days, as Treasury yields have eased, but major action can be expected after inflation print,” trader with a primary dealership said. U

S Treasury yields eased amid value purchases after the benchmark 10-year yield rose above 4.45% on Monday.

The 10-year yield was last quoted at 4.36% in Asia hours.

Traders are awaiting US inflation data due later in the day.

The print is seen at 0.3% on-month, and at 3.4% for 12 months to March.

strong reading of US non-farm payrolls last week had raised uncertainty over the timing of rate cuts from the Federal Reserve.

The odds for a Fed rate cut in June have inched back to over 50% after falling below the level following the jobs data, according to the CME FedWatch tool.

Indian bond yields may inch higher as Treasury yields jump

The US print would be followed by India’s retail inflation data due Friday, and a Reuters poll predicts the reading at 4.91%, down from 5.09% in February.

The benchmark Brent crude contract staying around $90 per barrel mark remains a concern for Indian bond traders, as higher commodity prices could seep into local inflation and delay rate cuts from the Reserve Bank of India.

New Delhi will raise 300 billion rupees ($3.61 billion) via sale of bonds, including a new 15-year note on Friday, while it will sell short-dated Treasury bills worth 270 billion rupees later in the day.