Ten-year Treasury bonds witnessed "zero trading" for the first time in two years Five-year Treasury bond auctions face the global bond market storm.

Japan will issue a five-year government bond on Wednesday, but concerns about the lack of liquidity and increased volatility in the Japanese bond market have once again intensified, casting a shadow over the auction. According to data from a brokerage firm, the benchmark 10-year Japanese government bond did not trade at all on Tuesday for the first time in over two years, with trading only appearing on Wednesday. Against the backdrop of global bond market turbulence, the liquidity crisis in the Japanese government bond market is becoming more apparent. On Tuesday, the yield on the 30-year German government bond climbed to a 14-year high, further confirming the increasing pressure faced by long-term bonds. The long-end of the Japanese government bond yield curve has been particularly volatile this year, sometimes following overseas market fluctuations, and sometimes impacting global trends in return. Meanwhile, the yield on short-term US government bonds has declined, bolstered by inflation data that reinforced expectations of a possible rate cut by the Federal Reserve in the short term. A Bloomberg indicator measuring the liquidity of Japanese government bonds shows that since early April, the deviation between the intraday yield and fair value of Japanese government bonds has significantly increased, now far surpassing the peak during the 2008 global financial crisis. Despite worrying signals, strategists in Tokyo are mostly optimistic about the five-year Japanese government bond auction. Kazuhiko Sano, Chief Strategist at Tokai Tokyo Securities, believes that the Japanese government bond prices may fall in the morning but rebound in the afternoon, leading to a slight decrease in yields. Miki Den, Senior Interest Rate Strategist at SMBC Nikko Securities, believes that the auction is likely to be successful. He points out that the yield on the five-year Japanese government bond is now higher than the level at the previous auction. However, he added that although there is a risk of bidirectional volatility in the short term, the downside risk is relatively greater. In the early hours of Wednesday, the yield on the five-year Japanese government bond rose by 2 basis points to 1.06%. Following zero trading on Tuesday, the yield on the 10-year Japanese government bond was at 1.510%, and the yield on the 30-year bond increased by 0.5 basis points to 3.095%. Bloomberg Macro Strategist Mary Nicola said, "The impact of US CPI data has passed, but more resistance is brewing. The yield on the 30-year German government bond has risen to its highest level since 2011, exacerbating concerns about fiscal sustainability and further dragging down the performance of the long end of the Japanese government bond yield curve. The GDP data for Japan released later this week may exacerbate concerns about stagflation, putting continued pressure on the long end of Japanese government bonds." The auction results will be announced at 12:35 pm local time, with investors focusing on key demand indicators. The average bid-to-cover ratio in the last auction was 3.54, with an average of 3.78 over the past 12 months. In the previous month's auction, the spread between the average bid and the lowest bid was 0.02. Last month, the Bank of Japan held a policy meeting and downplayed expectations of a rate hike in the near future. Governor Haruhiko Kuroda dismissed concerns about the central bank's slow action in containing inflation.