Japanese government bond futures edged lower on Friday as investors unwound buy positions reflecting falls in US Treasury prices, but activity was thin with daily turnover dipping to the lowest in about a year.
Market participants refrained from taking fresh positions as they awaited official confirmation of details of debt issuance plans for the next fiscal year, due later in the day.
"The market lacks clear direction as there are only a few participants present today. Players who held long positions in futures unwound them after seeing falls in US Treasuries," said Makoto Yamashita, chief Japanese interest rates strategist at Deutsche Securities.
"Trading in cash JGBs are also very thin as investors were on the sidelines ahead of the end of the year."
March 10-year futures fell 0.12 point from Wednesday to 139.73. Volume dropped to a one-year low of 11,685 contracts.
Tokyo financial markets were closed for a public holiday on Thursday. The benchmark 10-year yield rose 1 basis point to 1.150 percent.
JGB prices were rangebound throughout the day and liquidity was low as market participants wound down operations ahead of year-end holidays.
Japan's government is expected later on Friday to approve a draft budget for the fiscal year starting next April 1 which will also include JGB issuance plans for the fiscal year.
Japan is widely expected to keep new bond issuance unchanged, while increasing its sales of both the 30- and 40-year JGBs by 100 billion yen ($1.2 billion) each per auction but keeping the issue amount of other maturities unchanged.
With many details of the issuance plan already priced in by the market, however, the announcement is not expected to have a major impact on trade.
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