June 11, 2019 / 4:15 PM / 2 months ago

Investors most neutral on U.S. Treasuries since January - survey

June 11 (Reuters) - Bond investors turned the most neutral on longer-dated U.S. Treasuries in about five months as U.S. President Donald Trump calling off tariffs on Mexico offset weaker-than-expected data on U.S. payrolls in May, a J.P. Morgan survey showed on Tuesday.

The share of investors who said they were neutral or holding longer-dated U.S. government debt equal to their portfolio benchmarks was 62%, the highest since Jan. 7. That compared with 52% the week before, the latest J.P. Morgan survey showed.

The percentage of investors who said they were long or holding more longer-dated Treasuries than their benchmarks equal those who they were short or holding fewer longer-dated bonds than their benchmark at 19%.

Investors began reducing their safe-haven Treasuries holdings over the weekend after Trump said late on Friday he suspended a 5% tariff on Mexican imports after Mexico agreed to a deal to stem the flow of Central American migrants crossing into the United States.

Bond yields had fallen earlier on Friday with 10-year yields hitting their lowest levels since September 2017 when the U.S. Labor Department said U.S. employers hired 75,000 workers last month, well below the 185,000 projected by economists polled by Reuters and a downwardly revised 224,000 in April.

The sharp deceleration in jobs growth stoked bets the Federal Reserve would lower key lending rates multiple times later this year in a bid to preserve the current U.S. economic expansion, which would be the longest on record this summer.

Active clients, which include market makers and hedge funds, scaled back their bullish bets on Treasuries after Trump's decision to suspend duties on Mexican goods into the United States.

Their net long position dropped to 10% on Monday, the lowest since April 22 and down from 50% a week earlier, the J.P. Morgan survey showed.

Reporting by Richard Leong Editing by Susan Thomas

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