Tokyo : Japan's bonds fell for a third week as signs the world's second-largest economy is recovering dampened demand for the safety of government debt.
Benchmark yields climbed to the highest level since the start of February before a government report this week that economists said will show exports surged more than 40 per cent last month from a year earlier.
Bonds also dropped last week as sentiment among Japanese manufacturers climbed and demand for services increased, signs the rebound is gathering momentum.
"Economic prospects are turning out be much brighter than expected," said Shinji Nomura, chief debt strategist in Tokyo at Nikko Cordial Securities Inc., part of Japan's third-largest banking group. "Upward pressure on bond yields will increase."
The yield on the 10-year bond rose two basis points this week to 1.36 per cent at Japan Bond Trading Co., the nation's largest interdealer debt broker.
The 1.4 per cent security due March 2020 fell 0.177 yen to 100.351 yen. The yield climbed as high as 1.37 per cent on Friday, matching the most since February 5.
Ten-year bond futures for June delivery slid 0.22 this week to 138.63 on the Tokyo Stock Exchange.
Japan's exports jumped 45.7 per cent in February, after rising 40.8 per cent the previous month, according to a Bloomberg News survey before the March 24 report.
