MUMBAI, May 15 (Reuters) - Indian government bond yields are expected to inch lower in the early session on Wednesday, tracking a decline in Treasury yields after dovish comments from the Federal Reserve chief on the economy, even as markets awaited U.S. retail inflation data.

The benchmark 10-year yield is likely to move in the 7.09%-7.14% range, following its previous close of 7.1067%, a trader with a state-run bank said.

"There could be some bullish bias continuing today, capturing the recent moves in Treasuries, but it would be tough for the benchmark to meaningfully break 7.09%-7.10% levels till inflation clarity," the trader said.

U.S. yields eased on Tuesday and stayed lower in Asian trading hours on Wednesday after Fed Chair Jerome Powell gave a bullish assessment of where the U.S. economy stands, with an outlook for continued above-trend growth and confidence in falling inflation.

The 10-year yield was close to its lowest level in five weeks and the spread with the two-year yield widened to around 40 basis points.

The U.S. consumer price retail inflation print is due after Indian market hours and economists polled by Reuters expect the closely watched core inflation to rise by 0.3% in April, down from 0.4% in March, for an annual gain of 3.6%, down from 3.8%.

Earlier this week, India's April retail inflation print met estimates and did not invite any major market move.

Traders also await the response of the government's second bond buyback in two weeks as it aims to buy bonds worth up to 600 billion rupees ($7.19 billion) on Thursday.

This would be followed by a fresh debt auction worth 310 billion rupees, which includes 200 billion rupees of 7.10% 2034 bond, replacing the existing benchmark bond soon.

"After a slow first half of the week, we are in for some action in the second half and the current levels could break," another trader added. KEY INDICATORS: ** Brent crude futures were 0.6% higher at $82.85 per barrel, after easing 1.2% in previous session ** Ten-year U.S. Treasury yield at 4.4447%, two-year yield at 4.8252% ** RBI to auction Treasury bills worth 270 billion rupees ($1 = 83.5030 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)