TOKYO, July 27 (Reuters) - Japan's 10-year government bond (JGB) yield fell to a one-week low on Thursday, as selling pressure receded on expectations that the Bank of Japan would keep its ultra-low rate policy unchanged.
The 10-year JGB yield was down 1 basis point (bp) to 0.435%, its lowest since July 21, after rising to 0.450% earlier in the session.
"This means most investors expect the BOJ will not change its policy. If they bet on the change, the yield could hit the policy limit of 0.5%," said Makoto Suzuki, a senior strategist at Okasan Securities.
Under the current policy, the BOJ caps the 10-year bond yield around 0% with an implicit ceiling of 0.5%.
"Selling pressure receded, particularly as foreigners were not short-selling JGBs."
Foreign net selling of Japanese government bonds hit its highest in four months last week, data from the Ministry of Finance showed on Wednesday. But it was because they cut their exposure.
The 20-year JGB yield fell 0.5 bp to 1.040%.
The 30-year JGB yield fell 1 bp to 1.305% and the 40-year JGB yield fell 3 bps to 1.450%.
The two-year JGB yield was flat at -0.045%.
The five-year yield rose 0.5 basis points to 0.095%.
The benchmark 10-year JGB futures fell 0.03 yen to 148.37, with trading volume of 9,798 lots. (Reporting by Junko Fujita; Editing by Savio D'Souza)
