April 2, 2019 / 4:34 PM / 3 months ago

RPT-UPDATE 1-Investors turn most bearish on U.S. Treasuries since January -survey

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NEW YORK, April 2 (Reuters) - Bond investors turned the most bearish on longer-dated U.S. government debt since January following the dramatic bond market rally in the latter days of the first quarter due to fears about a recession, a J.P. Morgan survey showed on Tuesday.

The margin of investors who said as of Monday they were "short," or hold fewer Treasuries than their portfolio benchmarks, over those who said they were "long," or hold more Treasuries than their benchmarks, was 11%. This compared with a net long of 5% the week before, according to the J.P. Morgan survey.

This was the highest level of net shorts since Jan. 7.

It was first time in eight weeks that more investors said they were short than long.

Only 15% of the investors polled said they were long on U.S. government bonds, down sharply from 26% a week earlier, the J.P. Morgan survey showed.

The share of investors who said they were short Treasuries rose to 26% from 21% a week ago.

The percentage of investors who said they were "neutral," or holding Treasuries equal to their portfolio benchmarks, climbed to 59% from 53% the week before, J.P. Morgan said.

Positions among active clients, which include market makers and hedge funds, showed they were 10% net short on longer-dated Treasuries. Last week, active longs and shorts were even at 10%.

The share of these clients who said they were neutral decreased to 70% from 80%.

In midday trading on Tuesday, the yield on the U.S. benchmark 10-year Treasury note was 2.476%, up from 2.412% a week earlier.

On Monday, the Treasury market recorded its worst day in nearly three months as encouraging data on factory activity in China and the United States touched off a dramatic sell-off in bonds.

Treasury securities with maturities of 20 years and longer generated a 4.7% total return in the first quarter, which ranked among the highest in the U.S. bond sector.

The overall $15.8 trillion Treasury sector posted a 2.1% return in the first three months of 2019, according to indexes compiled by Bloomberg and Barclays.

Reporting by Richard Leong; editing by Chizu Nomiyama and G Crosse

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