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Hardly anyone is trading it

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As a result, traders are turning to bond futures, where having more buyers and sellers makes entering and exiting positions easier. The futures market is often used for trading in oil, gold and agriculture products. Using the derivative products allows traders to bet on where prices will go without the hassle of having to buy an item itself.

Open interest, a measure of trading volume in futures, for 10-year Japanese government bond futures rose 46 percent in March from a year ago, according to data released last week by the Japan Exchange Group. Year-over-year open interest in February and January also rose, by nearly 23 percent and 19 percent, respectively.

“What the key thing is to realize is the futures market has pretty much supplemented the cash market, and that’s where the trading activity is,” said Jerry Lucas, senior strategist at UBS Wealth Management. “With the futures market it’s the easiest way to express a view on where you think rates are going to go, especially in a low volatility environment.”

Lucas expects the central bank could soon increase its holdings to half of the market.

Monetary policy is likely to stay the same for the near future. The Bank of Japan eventually needs to consider how to wind down its massive stimulus program, but any change would be gradual and it’s currently “inappropriate” to tighten policy, governor Haruhiko Kuroda said in his first news conference after his formal reappointment to another five-year term.

There are “virtually no cash instruments traded in certain parts of the JGB curve,” Ajay Rajadhyaksha, head of macro research, Barclays, said in late March. “We don’t see suddenly reverting back until there is substantial policy change on the monetary policy side.”

“The lack of vol will remain for the foreseeable future,” he said.

One possible consequence for international markets is lower yields globally.

“Japanese investors, because they have a hard time getting ahold of those bonds, they’re increasingly looking for alternatives,” said Brian Nick, chief investment strategist at Nuveen.

That likely includes German bunds and U.S. Treasurys, some analysts said. And the more buying demand there is, the more the yields fall.

Japanese investors were net buyers of U.S. Treasurys in January for the first time in six months, according to the latest U.S. Treasury data.

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Tesla’s China sales tumble 27% in April from March

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A gigafactory of electric carmaker Tesla is seen in Shanghai, China October 18, 2019.

Aly Song | Reuters

BEIJING — One gauge of Tesla’s success in China pointed to a sharp drop in sales in April.

The U.S.-based electric car company sold 25,845 made-in-China vehicles last month, down 27% from 35,478 in March, according to figures released Tuesday by the China Passenger Car Association.

The report noted that in April, Tesla exported 14,174 cars from its Shanghai factory. The association did not disclose Tesla’s export figures for March.

Tesla’s sales decline came amid an overall 12% month-on-month drop in April for new energy passenger cars in China, according to the association. The category includes pure-electric and hybrid cars.

Guangdong-based BYD, which is backed by U.S. billionaire Warren Buffett, came close behind Tesla in April. The passenger car association said BYD sold 25,450 new energy vehicles in April, up 6.5% from 23,906 in March.

The figures are close to those disclosed by BYD itself, which said earlier this month it sold 25,034 new energy passenger cars in April.

Some in China’s electric car industry have cast doubt on the accuracy of the association’s figures.

China becomes more important for Tesla

Tesla does not disclose monthly deliveries by country. The company delivered 184,800 cars worldwide during the first quarter.

Publicly disclosed figures indicate China is becoming a more and more important market for Tesla. The company made $3 billion in sales in the country during the first quarter, accounting for 29% of global sales for the period. That’s up from up from 21% for all of 2020.

Meanwhile, negative press has increased for Tesla in China. In the last few months, local reports of Tesla brake failures, crashes and explosions have mounted and drawn scrutiny from regulators. Separately on Tuesday, Reuters reported, citing sources, that Tesla has halted plans to buy land and expand its Shanghai factory.

Tesla did not immediately respond to a request for comment on the report, or the association’s figures. Shares fell about 1.9% overnight and are down roughly 12% for the year so far.

Looking ahead, the passenger car association pointed out the capital city of Beijing is releasing 60,000 new license plates for new energy vehicles this month, which should help sales for recent market launches such as Tesla’s Model Y and Aion Y, produced by a new energy brand spun-off from Chinese state-owned automaker GAC.

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WHO says it accounts for 50% of reported cases last week

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A Covid-19 coronavirus patient rests inside a banquet hall temporarily converted into a Covid care centre in New Delhi on May 10, 2021.

Arun Sankar | AFP | Getty Images

India’s daily Covid-19 death toll hit another record high on Wednesday, as the World Health Organization said the country accounted for half the total reported cases in the world last week.

Health ministry data showed that at least 4,205 people died over a 24-hour period — the largest single-day increase in fatalities reported by the South Asian country since the pandemic began. However, reports have suggested that the death toll in India is being undercounted.

Total reported cases in India topped 23 million and more than 254,000 people have died.

The World Health Organization said that India accounted for half of all cases reported globally last week as well as 30% of global deaths.

India has reported more than 300,000 daily cases for 21 consecutive days. On Tuesday, however, the health ministry said its data showed a net decline in the total active cases over a 24-hour period for the first time in 61 days.

The second wave began around February and accelerated through March and April after large crowds were allowed to gather, mostly without masks, for religious festivals and election rallies in various parts of the country.

India’s health-care system is under tremendous pressure due to the spike in cases despite an inflow of international aid, including oxygen concentrators, cylinders, and generation plants as well as anti-viral drug Remdesivir.

To alleviate some pressure on health-care workers, India is recruiting 400 ex-medical officers from the armed forces, the defense ministry announced on Sunday.

WHO’s update on India, South Asia

In its latest weekly epidemiological update on the pandemic, the U.N. health agency said it was observing “worrying trends” in India’s neighboring countries, where cases are also rising.

For example, in Nepal, almost 50% of all individuals tested for Covid-19 are reportedly infected as the landlocked country struggles with a second wave. It is said to have run out of vaccines as India suspended its exports in light of the situation at home.

WHO recently classified the Covid variant B.1.617 that was first detected in India as a variant of concern, indicating that it’s become a global threat. The variant has three sub-lineages “which differ by few but potentially relevant mutations in the spike protein as well as prevalence of detection globally,” WHO said in the report.

India’s dramatic surge in cases has raised questions on the role played by Covid variants like the B.1.617 as well as the B.1.1.7 that was first detected in the United Kingdom.

The international health body said it conducted a recent risk assessment of the situation in India and found that the resurgence and acceleration of Covid-19 transmission in the country had several likely contributing factors: That includes the presence of Covid variants that have potentially increased transmissibility as well as mass gatherings and reduced adherence to public health and social measures.

“The exact contributions of these each of these factors on increased transmission in India are not well understood,” WHO said.

Elsewhere, Prime Minister Narendra Modi will not attend a G-7 Summit in person in the U.K. next month due to the Covid-19 situation at home, the Indian foreign ministry said. Modi was invited by British Prime Minister Boris Johnson to attend the event as a special invitee, according to the ministry.

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UK economy contracted by 1.5% in the first quarter

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Commuters walk along the Thames Path in view of Tower Bridge in London, U.K., on Monday, Dec. 14, 2020.

Hollie Adams | Bloomberg via Getty Images

LONDON — The U.K. economy contracted by 1.5% in the first quarter of 2021 as nationwide lockdown measures continued to weigh on activity, preliminary estimates revealed on Wednesday.

Economists polled by Reuters had expected GDP to shrink by 1.7%, with stringent restrictions having been in place throughout the first three months of the year as the country tried to contain spiraling Covid-19 cases.

However, with lockdown measures now being phased out and the economy reopening, the country is expected to see a sharp rebound for the remainder of the year.

The International Monetary Fund expects U.K. GDP to grow 5.3% in 2021, partially recovering from last year when the economy saw its largest annual contraction since the Great Frost of 1709.

Prime Minister Boris Johnson announced Monday that the next stage of lockdown easing will go ahead as planned on May 17, with international travel permitted in most circumstances and hospitality venues allowed to welcome customers indoors, a lifeline for the country’s dominant services industry.

The economy grew 2.1% month-on-month in March, slightly exceeding expectations, and the level of GDP now sits 8.7% below its pre-pandemic level at the end of 2019, according to the Office for National Statistics. On a year-on-year basis, GDP shrank by 6.1% in the first quarter.

Both services and production output contracted over the first quarter, but construction output grew.

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