TOKYO: Japan’s 10-year government bond yield hit a more than seven-week low on Wednesday, as prospects faded for further rate hikes by the Bank of Japan in the near term.

The 10-year JGB yield fell to 0.795%, its lowest since Aug. 5 when it sank in a market turmoil that sent the Nikkei 225 index 12% lower. The yield was last up at 0.5 basis point at 0.81%.

Expectations for more rate hikes have fallen after comments from the BOJ governor, said Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

The BOJ can afford to spend time watching developments in financial markets and overseas economies as it sets monetary policy, Governor Kazuo Ueda said on Tuesday, suggesting that the central bank was in no rush to raise interest rates further.

Bond prices were also supported by a firm outcome of the BOJ’s bond buying operation, Tsuruta said.

The central bank earlier in the day conducted a bond buying operation for bonds with maturities from one to more than 25 years.

Some strategists said investors built positions in JGBs ahead of an election to choose the ruling Liberal Democratic Party’s new leader.

Sanae Takaichi, a leading candidate in the race, supports the low interest rate policy and said this week it would be “stupid” to raise rates now.

Japan’s 2 year bond yield hits 13-year high as BOJ chief hints chance of another rate hike

The two-year JGB yield rose 0.5 bp to 0.345%, a level where further rate hikes in the near term are seen not priced in.

The five-year yield rose 0.5 bp to 0.46%.

The 20-year JGB yield fell 2 bps to 1.65%.

The 30-year JGB yield fell 2.5 bps to 2.03%.

The 40-year JGB yield fell 3 bps to 2.325%.