Japan 20-Year Bond Futures Untraded; Volatility Near Record Low

Japan’s 20-year bond futures were untraded for the first time since April, when the contracts were reintroduced after a 12-year hiatus.

Osaka Exchange Inc., a unit of Japan Exchange Group Inc., confirmed that there was no trade in the contracts, which closed at 200.20 yesterday from 200.25 at the end of last week. Historical price volatility on Japanese government bonds slid to a record low of 0.647 percent on June 30, according to data compiled by Bloomberg going back to December 1994.

“To be honest, there hasn’t been much volume in the 20-year futures and today just happened to have zero trades,” said Teruyoshi Sotome, a Tokyo-based senior bond strategist at Mizuho Securities Co., one of the 23 primary dealers obliged to bid at government debt sales. “Participation isn’t expanding as volatility remains low in the market.”

The Bank of Japan’s bond purchases have pushed down price volatility, according to Sotome. The BOJ announced an unprecedented plan to buy about 7 trillion yen ($69 billion) of JGBs a month on April 4, 2013.

Japan’s 5-year government bond yield was at 0.15 percent, the lowest since April 2013, as of 4:35 p.m. in Tokyo, according to Japan Bond Trading Co. The benchmark 10-year yield dropped to 0.55 percent, the least in a week, while the 2-year yield declined to 0.06 percent, a level unseen since Feb. 18.

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