Not a Single Japan 10-Year Bond Traded Tuesday: Death by BOJ

(Bloomberg) -- Some jobs might be threatened by automation. But when it comes to government bond trading in Japan, the biggest threat might be the country’s central bank.

The Bank of Japan has vacuumed up so much of the government bond market -- in excess of 40 percent -- that it’s left fewer securities for others to buy and sell. Some other buyers, such as pension funds and life insurers, also tend to follow buy-and-hold strategies.

That’s the backdrop to Tuesday’s session, when not a single benchmark 10-year note was traded on exchange, according to Japan Trading Co. data. Barclays Securities Japan rates strategist Naoya Oshikubo, summed it up, with perhaps an understatement: "the JGB market was generally thin."

The upside for the BOJ is that with such little going on in the market, it makes it easier to control the yield curve, with less need for intervention. Governor Haruhiko Kuroda noted to lawmakers Wednesday that the central bank has bought 75 percent of the government bonds issued in the fiscal year ending this month.

Meantime, for Oshikubo and his colleagues, there’s more time to catch up on reading.

To contact the reporters on this story: Christopher Anstey in Tokyo at canstey@bloomberg.net, Hidenori Yamanaka in Tokyo at h.y@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Adam Haigh

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