The BOJ is taking the fun out of the bond market

Author: Justin Low | Category: News

While most traders are complaining about algos/automation these days, bond traders in Japan are left infuriated by the central bank

In yesterday's trading session, there wasn't a single trade done on the Japanese benchmark 10-year note. That's according to Naoya Oshikubo, a rates strategist at Barclays Securities Japan. He notes that "the JGB market was generally thin".

Earlier, BOJ governor Kuroda claimed that the central bank has bought up 75% of JGBs that were issued during the fiscal year of 2017.

That is the kind of thing that saps the life out of the market - leaving for very few securities left for traders to buy and sell. And that's not even counting for pension funds or insurers who generally tend to just buy-and-hold.

But if anything, it makes the BOJ's life easier when they are trying to manage their yield curve control policy - due to a lesser need for market intervention.