Investors least neutral on longer-dated U.S. bonds since Oct -survey - Southern Business Review


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Tuesday, February 5, 2019

Investors least neutral on longer-dated U.S. bonds since Oct -survey

NEW YORK, Feb 5 (Reuters) - Bond investors were least neutral this week on U.S. longer-dated Treasuries from a week ago following a perceived dovish turn from the Federal Reserve, a J.P. Morgan survey showed on Tuesday.

The percentage of investors who said on Monday they were “neutral,” or were holding Treasuries equal to their portfolio benchmarks, fell to 47 percent from 57 percent the week before, J.P. Morgan said.

This was the lowest neutral reading since Oct. 9.

Last Wednesday, the U.S. central bank took back its promises of “further gradual increases” in interest rates, and said it would be “patient” before making any further moves on signs of slowing economic growth amid trade tensions and federal budget conflicts.

Bond yields fell in the wake this perceived shift at the Fed before a rebound on Friday in the wake of a surprisingly strong payrolls report.

On Tuesday, benchmark 10-year Treasury yields were 2.698 percent, down from 2.712 percent a week earlier.

The margin of investors who said they were “short,” or holding fewer Treasuries than their portfolio benchmarks, over those who were “long,” or holding more Treasuries than their benchmarks, edged up to 3 percent from 2 percent the prior week, J.P. Morgan said. The share of investors who said they were short Treasuries grew to 28 percent from 23 percent last week. A quarter of investors surveyed said they were long on U.S. government bonds, compared with 21 percent the previous week.

Reporting by Richard Leong; editing by Jonathan Oatis