Japanese Bond Market Volume Collapses To Record Low

Tyler Durden's picture

With volatility at record lows...

The Japanese bond market remains paralyzed with trading volumes hitting record lows as private bondholders no longer dare to even breathe without instructions from the central bank.

Gross purchases of JGBs by investors dropped 22% to 12.6t yen ($115.1b) in July, the least since May 2016, according to the latest data from Japan Securities Dealers Association Monday. On a rolling 12-month average basis, the volume was at an all-time low.

 

As far back as 2014, traders were warning that Japan's bond market is dead... and so is its stock and FX markets...

The Bank of Japan’s unprecedented asset purchase program has released a creeping paralysis that is freezing government bond trading, constricting the yen to the tightest range on record and braking stock-market activity.

 

...

 

“All the markets have been quiet,” said Daisuke Uno, the Tokyo-based chief strategist at Sumitomo Mitsui Banking Corp. “We’ve already seen the BOJ dominance of JGBs since last year, but recently participants in currency and stock markets are also decreasing as those assets have traded in narrow ranges.”

 

...

 

The flows on both the buying side and selling side continue to fall,” said Takehito Yoshino, the chief fund manager at Mizuho Trust & Banking Co., a unit of Japan’s third-biggest financial group by market value. “Falling volatility is a very serious problem for traders and dealers who are unable to get capital gains.”

And now, as more market participants throw in the towel on a rigged, centrally planned market, the result will - no could - be a further loss of market function, and a guaranteed crash once the BOJ and other central banks pull out (which is why they can't). As the Nikkei politely concludes,

"if the bond and money markets lose their ability to price credit based on future interest rate expectations and supply and demand, the risk of sudden rate volatility from external shocks like a global financial crisis will rise."

Translation: in a world where only central banks trade, everyone else is destined to forget forget what trading, and certainly selling, means.

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InjectTheVenom's picture

 

Ho Li Fuc  ! ! !

malek's picture

Did you already PC-adjust the middle word, from Lee?

CRM114's picture

Wasn't he the First Officer in that Asiana 214 crash, under Captain Wi To Lo? ;)

east of eden's picture

Something that can not continue, will not continue.  I hope the flash boys get their skin removed.

eccitante's picture

Sign the petition to finally DECLARE GEORGE SOROS (AKA GEORGE SCHWARTZ) A TERRORIST seize all of his related organizations' assets under RICO and NDAA law. George Soros is a Hungarian-American financial speculator, "philanthropist", political "activist" and author who is of Hungarian-Jewish ancestry and holds dual citizenship. He drives more than 50 global and regional programs and foundations. Soros is named an architect and a sponsor of almost every revolution and coup around the world for the last 25 years. The USA is thought to be a vampire due to him and his puppets, not a lighthouse of freedom and democracy. His minions spill blood of millions and millions of people just to make him even more rich. Soros is a Leftist Oligarch / Globalist Kleptocrat and major sponsor of the Democratic party, Hillary Clinton, and hundreds of politicians all over the world. 

 Soros is a menace to the free world and stands in the way of making America great again. He is guilty of the following crimes:

1) Financially supports open sedition in major American cities resulting in millions of dollars of property damage as well as loss of life.

2) Attempts to manipulate democratic elections by donating millions of dollars to his preferred candidates.

3) Seeks to curtail American sovereignty. In his own words: "The main obstacle to a stable and just world order is the United States ... Changing [the] attitude and policies of the United States remains my top priority."

4) Is a currency manipulator. Soros initiated a British financial crisis by dumping 10 billion sterling, forcing the devaluation of the currency and gaining a billion-dollar profit.

 https://petitions.whitehouse.gov/petition/declare-george-soros-terrorist-and-seize-all-his-related-organizations-assets-under-rico-and-ndaa-law

 

Jtrillian's picture

Soros and Kissinger could be bunk mates.  Draghi and Kuroda could be their neighbors in the next cell. 

Until people wake up and recognize who the real enemy is, the masses will continue to fall victim to their manipulation. 

Sadly, I do not see this happening any time soon. 

indygo55's picture

This is all true but don't you know, Trump and Sessions won't touch then. This is plain and simple. Just read that indictment of Awan. This is all a coverup of the DNC, Hillary, DWS, Obama and the whole cast of charachters. 

LetThemEatRand's picture

I keep coming back to the same conclusion that war is the only option left for the central banks at this point.  They can't normalize rates or sell off their balance sheets without destroying the only bubbles that are still propping up Western economics (real estate, stocks, government debt spending, and consumer/student debt spending).  If they ever tried to reset the system without a boogie man/war to blame it on, they risk torches and pitchforks.  They would rather have the people using the weapons on each other, and I'd say they are doing quite a nice job of making that a reality.  

CRM114's picture

They aren't going to get an international war of any significance. The public isn't interested, never mind that they realise any war is just a tax drain and 40 years of terrorism.

They might get a civil war, but it'll still be pitchfork time for them.

LetThemEatRand's picture

The public isn't interested right now.  Pretty much every significant war since I've been alive (the '60's) has been based on a false flag.  All it takes is a small attack on the US or one of its warships etc and 80+% of the population is ready to send themselves/their sons and daughters to wherever they are told the attack came from and unleash hell.

That said, I hope you are right and I am wrong.

CRM114's picture

That would not be my understanding of the current mood, either within the Armed Forces or outside.

There are also ever-increasing problems with international coalitions. You will recall the effort needed by the UK PM to persuade Parliament to bomb Syria, then discovering the RAF could only spare 6 more aircraft, for 1 month. Add in all those who haven't joined or left coalitions early in the last 15 years, and basically nobody wants to play any more.

jmack's picture

Sounds like they need some electrical grid "gamblers" to enter the market to provide liquidity....     which is it oh choir of whiners, gamblers in a casino or seized markets, pick your poison.

buzzsaw99's picture

"Falling volatility is a very serious problem for traders and dealers who are unable to get capital gains.”

this makes me sad.  /s

tropicthunder's picture

All of the JGB junkies have already moved over to the Crypto pits and are making far superior gains..

guru69's picture

....until the plug gets pulled and when restarted, they find their accounts are empty.

Herdee's picture

It has to be the American's turn now at musical chairs. Time to print or default.

Father ¢hristmas's picture

"and a guaranteed crash once the BOJ and other central banks pull out (which is why they can't)."

Well, shit, nigga.  There are only two ways to get volatility in this centrally-planned era, and that is wars and rumors of wars, or crash/collapse.

Scuba Steve's picture

Or Flip the market breaker switches ON and Off continuously with a "Just kidding smirk" continuously and in no pattern.

Jtrillian's picture

Dear Central Banks,

This is what happens when the BOJ owns everything. 

You have failed... miserably!