NEW YORK May 31 The margin of investors who are
bearish on longer-dated U.S. Treasuries over those who are
bullish shrank before the end of May, J.P. Morgan's latest
Treasury client survey showed on Tuesday.
The share of "short" investors who said they were holding
fewer longer-dated U.S. government securities than their
portfolio benchmarks fell to 27 percent from 30 percent in the
prior week, according to the survey.
J.P. Morgan surveyed clients including bond fund managers,
central banks and sovereign wealth funds.
The share of "long" investors who said they were holding
more longer-dated Treasuries than their benchmarks held at 14
percent for a second week.
Short investors outnumbered long investors by 13 points,
compared with last week's 16 points which was the most since
Dec. 12, 2016.
Investors expected longer-dated government bond yields would
rise in the coming months as the U.S. labor market has
strengthened further, analysts said.
Centrist Emmanuel Macron's French presidential victory over
anti-European Union rival Marine Le Pen caused investors to
reduce their safe-haven holdings of government bonds, propelling
benchmark U.S. yields to a five-week high earlier
A heavy wave of U.S. government and corporate bond supply
had also helped stoke the rise in longer-dated Treasury yields.
On the other hand, political uncertainties in Italy and
Greece, together with doubts about whether U.S. inflation would
reach the Federal Reserve's 2 percent goal, have kept investors
from piling on bets against longer-dated Treasuries, analysts
Since last week, investors have been snapping up
longer-dated bonds to rebalance their portfolios at month-end
and for curve-flattening trades based on the notion that
longer-dated Treasuries would fare better than shorter-dated
issues if the Federal Reserve raises overnight borrowing costs
further, analysts said.
On Wednesday, the yield on the benchmark 10-year Treasury
was 2.201 percent, compared with 2.297 percent a
week ago, according to Reuters data.
Active clients, which included market makers and hedge
funds, increased their bearishness on longer-dated Treasuries in
the latest week, the J.P. Morgan survey showed.
Thirty percent of those clients said they were short, up
from 20 percent last week, while 20 percent said they were long,
unchanged from a week ago. The rest said they were neutral, down
from 60 percent a week earlier.
(Reporting by Richard Leong; Editing by Meredith Mazzilli)