TOKYO: Japanese government bonds mostly edged slightly higher on Monday, while JGB futures marked their lowest monthly trading volume in nearly 14 years for the first full month of the Bank of Japan's latest easing strategy of yield curve control.
The BOJ began a two-day policy meeting on Monday, at which it is widely expected to hold policy steady. BOJ Governor Haruhiko Kuroda has recently suggested that there will be no further stimulus measures from the bank unless Japan experiences a big external shock.
In September, the BOJ replaced targeting money supply with a yield curve control (YCC) strategy, under which the benchmark 10-year JGB yield would be guided to "around" zero percent. On Monday, it was flat at minus 0.050 percent.
December 10-year futures ended up 0.07 point at 151.71, while total trading volume for October was 323,401 lots, the lowest since December 2002.
"Low trading volume could be an impact of the current monetary policy, so I am not surprised to see it, and I don't see it changing as long as the BOJ keeps the current monetary policy," said Keiko Onogi, a senior strategist at Daiwa Securities.
"Not just futures, but also if you look at open interest of the leading JGB futures contract, it has been very low compared to other leading futures contracts in the past," she said, adding, "it's getting to be a very tough market."
In the superlong zone on Monday, the 20-year JGB yield edged down half a basis point (bp) to 0.380 percent, while the 30-year yield fell 1 bp to 0.505 percent.
The BOJ offered to buy 400 billion yen ($3.81 billion) of 1- to 3-year JGBs, 420 billion yen of 3- to 5-year JGBs, 190 billion of 10- to 25-year JGBs, and 110 billion yen of JGBs in the 25- to 40-year zone under its asset purchase operations.
The market largely shrugged off downbeat economic data released early in the session. Japan's industrial output stalled last month, while retail sales fell more than expected.
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