NEW YORK, March 28 Investors reduced bullish
bets on longer-dated U.S. Treasuries on concerns that U.S.
President Donald Trump and top Republican lawmakers may struggle
to pass fiscal stimulus policies, J.P. Morgan's latest Treasury
client survey showed on Tuesday.
Their nervousness intensified after House of Representatives
Speaker Paul Ryan on Friday shelved a Republican-sponsored bill
to overhaul the Obama administration's 2010 healthcare law due
to a lack of support, spurring bids for longer-dated Treasuries.
Investors are worried the setback could hamper efforts for a
broad restructuring of the tax code, including cuts to the rates
paid by corporations. The anticipated tax cuts had underpinned
the surge in bond yields and stock prices following Trump's win
in the Nov. 8 presidential election.
The share of "long" investors who said they were holding
more longer-dated Treasuries than their benchmarks fell to 16
percent in the week of March 27 from 23 percent in the prior
week, J.P. Morgan's survey showed.
J.P. Morgan surveyed clients, including bond fund managers,
central banks and sovereign wealth funds.
The yield on the benchmark 10-year Treasury was
2.362 percent early on Tuesday, down from 2.434 percent a week
ago. It hit a one-month low of 2.348 percent on Monday.
The share of "short" investors who said they were holding
fewer longer-dated U.S. government securities than their
portfolio benchmarks fell to 20 percent from 23 percent the
Short investors outnumbered long investors by 4 percentage
points. A week ago they were equal.
The share of "neutral" investors who said they were holding
amounts of longer-dated Treasuries that match their benchmarks
rose to 64 percent from 54 percent last week, the survey showed.
Active clients that include market makers and hedge funds,
who are seen to take on speculative bets in Treasuries, turned
much more neutral in the latest week, the J.P. Morgan survey
Eighty percent of them said they were neutral, up from 50
percent the prior week. None of them said they were short,
compared with 20 percent last week, while 20 percent of them
said they were long, which was less than 30 percent last week.
(Reporting by Richard Leong; Editing by Paul Simao)