Japanese bonds headed for a fifth weekly decline before a U.S. report that economists said will show consumer sentiment improved this month. Benchmark 10-year bonds extended their biggest weekly loss in two months as the yen trading near a one-month low helped push local stocks toward a second weekly gain. The extra yield offered by 20-year bonds over 10-year debt was the widest in more than two years before an auction of the longer-maturity securities next week. “In the light of the improved U.S. economy, it’s unlikely central banks in Japan and the U.S. will ease policy further and long-term bond yields will continue to fall,” said Akitsugu Bandou, a senior economist in Tokyo at Okasan Securities Co. “Twenty-year bonds have a bigger risk of price fluctuation and are more susceptible to selling as a hedge before the auction in these unfavorable surroundings.” The 10-year yield climbed 8.5 basis points this week, or 0.085 percentage point, to 1.015 percent as of 2:17 p.m. in Tokyo, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. That is the biggest increase since the week ended Sept. 3. The 1 percent security due September 2020 fell 0.767 yen to 99.865 yen. The yield rose one basis point today. Ten-year bond futures for December delivery gained 0.05 to 142.47 at the Tokyo Stock Exchange. Consumer sentiment in the U.S. climbed to 69 in November, the highest since June, from 67.7 in October, according to a Bloomberg survey before today’s report from Thomson Reuters and the University of Michigan. Weaker Yen The yen has weakened 1.4 percent versus the dollar this week, the biggest drop since the period ended Sept. 17. The currency fell to 82.80 on Nov. 10, the lowest since Oct. 7. The Nikkei 225 Stock Average posted the highest close since June 24 yesterday as a weaker yen increased the value of overseas sales at Japanese companies when repatriated. The gauge fell 1.1 percent today. The spread between Japan’s 20- and 10-year yields widened to 91.5 basis points, a level not seen since March 2008. The Ministry of Finance will sell 1.1 trillion-yen ($13.4 billion) of 20-year debt on Nov. 18. Primary dealers often reduce holdings of bonds before an auction in case prices decline before they can pass on the new securities to investors. To contact the reporter on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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