Japanese Bond Futures Volume Collapses To Zero Even As Service Sector Implodes

Tyler Durden's picture

You know things have got a little too strange when the largest government bond market in the world saw no futures trades in the morning session last night. We may complain in the US of falling volumes but none, zero, zip, nada is about as low as it gets; and that is how many trades occurred in the 20Y futures contract in Japan (and 10Y cash bond market). This is not the first time as Mizuho warned in Nov 2013 that "to all intents and purposes, there is no JGB market." And this lack of trading on a day when major macro data printed far worse than expected... well played Abe... you entirely broke your bond market.

As Bloomberg reports, 10yr cash bond and 20-year bond futures were untraded in themorning session (Japan’s benchmark 10-yr note had no trade all day on April 14; that was the first time since Dec. 2000)

And this total lack of trading occurred on a day when Japan's Services sector data collapsed 5.4% (considerably worse than expected) as the post-tax-hike hangover hit like a Tsunami...

It seems Mizuho's warnings were all too real...

“The JGB market is dead with only the BOJ driving bond prices,” said Tetsuya Miura, the chief bond strategist at Tokyo-based Mizuho, one of the 23 primary dealers obliged to bid at government auctions. “These low yields are responsible for the lack of fiscal reform in the face of Japan’s worsening finances. Policy makers think they can keep borrowing without problems.”


"The BOJ’s priority is to lower Japan’s real interest rates and ensure an end to deflation, even if they have to sacrifice liquidity and trading volumes in the bond market,”


“Market functions are sacrificed for the sake of ending deflation,” said Izuru Kato, the Tokyo-based president of Totan, a research unit of money-market broker Tokyo Tanshi Co. A reduction in monetary stimulus could cause a drop in bond prices, which “will make it difficult for the BOJ to normalize policy,” he said.


"Liquidity has evaporated as the BOJ has gobbled up most of the market,” Nicholas Spiro, the London-based managing director of Spiro Sovereign Strategy, wrote in an e-mail. “To all intents and purposes, there is no JGB market.”

Well played Abe, well played...

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maskone909's picture

not to worry, goldman is putting togather a reeeeal nice algo to drive up that volume.  dont worry pesants, everything is a-o-k

Terminus C's picture

If I understand this correctly, the Japanese gov't owns all of its own bonds and they ain't sellin'.

Algo's can't do anything if there is nothing to buy and sell.

NoDebt's picture

I've been around here a while, not much makes be pause any more.  But that's just downright creepy right there.

Aaaarghh's picture

something just has to give soon! ffs...

disabledvet's picture

Yen and euro...nuked simultaneously.

john39's picture

clearly the japanese central bank needs to create a few spin off entities that can buy and sell bonds back and forth to each other.  you know, like Belgium does for the U.S.  problem solved.

Cangaroo.TNT's picture

Right?  You would think they'd at least pocket swap to create the illusion of a market.

NoWayJose's picture

When there is no 'market' it means that the things the market is supposed to be trading are on their way to be worthless.

IronShield's picture

Perhaps Ms. Watanabe is starting to favor the shiny instead.  Well played Ms. Watanabe, well played.

kliguy38's picture

We don't need no stinkin' bonds!!!

q99x2's picture

Japanese transmissions were never as good as their engines. Put a little sawdust in er and she'll make it up the hill.

Dr. Engali's picture

The japanese bond market is dead and we are headed there too. Thank God for tremendous demand from Belgium.

Winston Churchill's picture

Its Zaire this month Doc.Or is it Monaco.

Anyways foreigners.Cough cough

yogibear's picture

Yep. The US Federal Reserve with it's bond buying desk in Belgium can buy all the bonds it wants but it cannot fix the problem in a debt zombieland.

Thought Processor's picture


FED masking purchases thru Belgium in order to continue the faux "Taper" at home- Check.

Japan with ZERO demand for it's own debt - Check.

Europe in the economic deadzone - Check.


All we need now is WWIII for the Reset.  


But then they're still working on that one............

Quinvarius's picture

China and Russia decided to win by just sitting back and watching odipshit destroy the USA for them.  So if the bankers want an actual war, they need to think local.  They should probably attack Canada.  It is full of white people.  Odipshit is game for that.

SDShack's picture

Civil War is the plan, and it is pretty obvious who the target country is. All the internal security dominos are being lined up for just one thing....

SDShack's picture

Japan's time has passed. They were useful to the world after WWII because they had a compliant educated population, that worked cheap and could be trained to make fantastic quality products that the world consumer wanted. But they had no raw materials, so they were only good as a labor/manufacturing supply point. Fast forward 20 years, and Indonesia, Taiwan, South Korea, China, and now India are the Japan of 40 years ago. Japan's fate was sealed by Fukishima. The investment money will never flow there again because the sociopaths know the demographics work against them.

orangegeek's picture

print money, buy bonds at rates that are far below reality, crush volatility, crush volume.


good job Yellen.


what's next?  more jobs lost due to a failing industry.


good job Yellen on this front too.


so how are funds making it now?  shorting derivates of volatility (they've moved past equity derivates).


we are on the edge of the edge of the edge.....

the not so mighty maximiza's picture

broken bond markets...o yeah i forgot, thats bullish

Itchy and Scratchy's picture

Volume preceeds price.

Soul Glow's picture

Supply/Demand metric; find price at P*.

But can we calculate this without any demand?

Saratoga's picture

Just call Belgium they will help them out.

yogibear's picture

Japan is the US Federal Reserve's grand Keynesian printing experiment. First they implode, then the US with it's enormous debt.

Japan is the canary in the debt coal mine.  

Soul Glow's picture

Get to work Yellen!  Demand has evaporated!

youngman's picture

I think they are not the only fake market out there...seems to me there are others..

Aaaarghh's picture

please let it all end.....PLEASE!!!!! ive had enough now. How long can this go on for? jeez..

Haus-Targaryen's picture

I'm thinking another 3-4 years.  This is the last big credit bubble.  I don't see how the big 4 can come back from when this explodes.  Even if the USD/BOE/ECB went full Japan, what would Japan do?

The end is near.  Although I am surprised its lasted as long as it has.

Soul Glow's picture

Oil production appears to be falling.  If oil supply falls and demand stays high (due to easy credit) price will jump, thus killing descretionary spending and GDP.  

That is where it ends.

Thought Processor's picture


Very true.


Fracking was always a stop gap to ensure the US economy would not implode in the mid 2000's.  

We're reaching the end of the stop gap now.  

War is coming.  Because the alternatives would threaten the current status quo.

yogibear's picture

The US Federal Reserve's slow grind downward can last for a long time. Adding more and more debt and saturating every crevice. 

suteibu's picture

Stop picking on Abe.  All of the geniuses at the BIS, IMF, OECD, et al, have given Abenomics its full support.  If anything, they all want the consumption tax hiked to 20%.  Whats a simple-minded kachuu to do?

Itchy and Scratchy's picture

Gee.....and I had my eye on those 20Y .00000000000001% yielders too! Who wudda thunk?

tuttisaluti's picture

The us buy bonds from japan, japan buys bonds from the eu, the eu from uk, the uk from us and so on.

And all of them are broke. Where does all the money come from?

yogibear's picture

Non-productive. One huge Federal Reserve  circle-jerk debt ponzi scheme. 

buzzsaw99's picture

mu mu mu mu my kuroda

gengc's picture

I thought that is scary that nobody is buying JCB bonds and that is the start of the end game. 

Callz d Ballz's picture

“The JGB market is dead with only the BOJ driving bond prices,” said Tetsuya Miura, the chief bond strategist at Tokyo-based Mizuho, one of the 23 primary dealers obliged to bid at government auctions. “These low yields are responsible for the lack of fiscal reform in the face of Japan’s worsening finances. Policy makers think they can keep borrowing without problems.”


ThroxxOfVron's picture

As long as the Primary Dealers are obliged to bid on Bond Auctions the 'Policy Makers' CAN 'keep borrowing'.  Problems?  The Electorate are the problems and those problems can be dealt with as long as the Auctions ARE bid by the Primary Dealers.

You WILL KNOW that TSHTF the moment that the Primary Dealers cry Force Majeur and DO NOT BID.

Satan's picture

It's not dead, it's just resting...

Soul Glow's picture

It's just a flesh wound.

Spungo's picture

Mission accomplished! It's not like they didn't see this coming. Even youtube saw this coming a year ago:


Tapeworm's picture

The youtube demonstration is superb. If one wants a very good visual explanation of the goomint debt trap, this is worth linking to your pals.

 Thanks for the link and pass it around.

Satan's picture

Abe broke the market
Sacrifice liquidity!
Now he has the squirts

FreeNewEnergy's picture

Oddly enough, I am speechless over the bidless Japanese bond market.

Consider this comment just a fart.