MUMBAI: Indian government bond yields eased for a second straight session on Wednesday, with the benchmark bond yield back to below 7%, as U.S. yields dropped from their recent highs.

The 10-year benchmark 7.26% 2033 bond yield was at 6.9917% as of 10:00 a.m. IST, after closing at 7.0102% in the previous session.

"The reversal in U.S. yields has calmed nerves, pushing the 10-year below 7% again, but for the day we should not see any major moves," a trader with a primary dealership said.

U.S. yields declined across the curve as a deal to raise the U.S. debt ceiling and avoid potential default reassured investors.

The two-year yield, considered to be a closer indicator of interest rate expectations, and the 10-year yield have moved around 15 basis points (bps) lower from their recent highs. They were last at 4.45% and 3.68% respectively.

The odds of another 25-bps hike by the Federal Reserve on June 14 stand eased slightly to 58%, after rising to as high as 72% recently, indicating that the hiking cycle may not have ended.

The Fed has raised rates by 500 bps since March 2022 to the 5.00%-5.25% mark.

Market participants will now focus on India's growth data for January-March and the previous financial year, releasing later in the day.

The data is expected to show the economy grew by 5% in the January-March quarter from a year earlier, accelerating from 4.4% in the previous quarter due to steady urban demand and government spending.

The data could also guide the Reserve Bank of India's monetary policy decision, due on June 8.

Falling oil prices also aid sentiment for local bonds as India is one the largest importers of the commodity. The benchmark Brent crude contract was $73.40 per barrel, after falling 4.6% in the previous session. (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)