TOKYO—Japan's financial markets, long some of the sleepiest in the world, erupted in activity late last week, logging wild price swings on skyrocketing volumes, and gluing traders to their screens for hours.

The yield on the benchmark 10-year Japanese government bond, whose biggest daily move in all of last year was around a 30th of a percentage point, swung 10 times farther on Friday, plummeting to 0.315%—which some Tokyo strategists said was the lowest ever for any equivalent government bond—then rocketing up to 0.620%,...