Japan's current account surplus rose more than expected in April thanks to firm exports and gains in investment income, a sign that the world's second-largest economy continues to enjoy a solid recovery.
The data did little to change the view that the Bank of Japan will raise interest rates in the July-September quarter, but worries about that prospect and sharp falls in U.S. Treasuries pushed Japanese government bond futures to a seven-year low.
Japan's current account surplus rose 50.3 percent in April from a year earlier to 1.9865 trillion yen ($16.33 billion), data from the Ministry of Finance showed on Wednesday.
It was above the market's median forecast of a 35.3 percent rise to 1.7888 trillion yen.
The growth in the current account surplus basically traced that of the trade balance, with softness in U.S. exports offset by firm demand for Japanese goods in other regions such as Asia, said Takeshi Minami, chief economist at Norinchukin Research Institute.
The trade balance rose 34.7 percent to a surplus of 1.0342 trillion yen, with exports rising 7.3 percent and imports up 3.2 percent.
The income surplus, mainly gains made on overseas investments, rose 41.5 percent from a year earlier. Expansion in the income surplus has been a major reason behind firm rises in the current account surplus.
The income account surplus has grown rapidly as interest rates overseas rose, pushing up interest rate income, said Takumi Tsunoda, an economist at Shinkin Central Bank Research Institute.
As Japanese firms began increasing their dividend payments, some of that income may be offset, he said. But the income account surplus will likely keep rising as a trend.
The income surplus in April rose for the fourth consecutive month, also exceeding the trade surplus for a fourth straight month, a finance ministry official said.
Analysts expect Japan's central bank to keep the key overnight call rate target unchanged at a two-day policy meeting that ends on Friday.
Chief Cabinet Secretary Yasuhisa Shiozaki reiterated on Wednesday that he wanted the BOJ's monetary policy to be in line with the government's economic policy.
Despite continued falls in consumer prices and wages, a recent series of firm economic indicators, including a drop in the jobless rate to a nine-year low in April, has reinforced views that the next BOJ hike will come in the third quarter, most likely in August.
The BOJ lifted the rate to a decade-high 0.5 percent from 0.25 percent in February, following its first rate hike in six years last July.
It has said it will boost interest rates gradually in line with the nation's steady economic expansion, already the longest in the postwar era.
Japan's economy grew 0.8 percent in January-March from the previous quarter, or an annualised 3.3 percent, outperforming both the United States and the euro zone, revised government data showed on Monday.
Separate data on Wednesday showed that industrial output in April was revised down to a month-on-month fall of 0.2 percent from a preliminary 0.1 percent decline.