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Most bullish U.S. bond investors in 8 weeks -survey
January 27, 2015 / 5:23 PM / in 3 years

Most bullish U.S. bond investors in 8 weeks -survey

NEW YORK, Jan 27 (Reuters) - Mounting worries about weak global growth boosted the number of investors who are bullish on longer-dated U.S. Treasuries this week to its highest level since early December, according to a J.P. Morgan Securities survey released on Tuesday.

Last week’s bond purchase program introduced by the European Central Bank, along with falling Wall Street stock prices, spurred purchases of 30-year U.S. Treasury bonds, whose yields booked a series of record lows.

The Federal Open Market Committee began a two-day policy meeting on Tuesday. After surprise rate cuts from some European central banks and the Bank of Canada last week, some traders reckoned the Fed might abandon any plans to lift interest rates in 2015.

The share of long investors, or those who said on Monday they held more longer-dated Treasuries than their benchmarks, rose to 22 percent from 20 percent the prior week.

This was the biggest share of long investors since Dec. 1, J.P. Morgan said.

By holding more longer-dated Treasuries, investors raise the duration of their portfolios in anticipation of a fall in yields or a protracted period of steady yields. A portfolio with a longer duration will notch greater profits if yields drop, and prices of longer-dated bonds rise more than those of shorter-dated debt.

If yields rise, longer-dated Treasuries produce bigger losses than short-term debt.

In midday trading on Tuesday, the yield on benchmark 10-year Treasuries notes hovered near a 20-month low. It was last traded 1.777 percent, down 5 basis points from late Monday.

The 30-year Treasuries yield was last 2.344 percent after touching a record low of 2.328 percent earlier Tuesday.

The share of investors who said they were “short” longer-dated Treasuries rose to 24 percent from 20 percent last week.

The difference in the share of short investors greater than the share in long investors was 2 percentage points. Last week, the share of long investors was equal to that of short investors, J.P. Morgan said.

Meanwhile, the share of all investors who said they were neutral on U.S. longer-dated Treasuries fell to 54 percent from 60 percent.

Among active investors, who are viewed as making speculative bets on Treasuries, 33 percent said they held more longer-dated Treasuries than their benchmarks, up from 25 percent the previous week.

The level of active long was the highest since Dec. 8.

Seventeen percent of them said they were short longer-dated U.S. government debt, up from 8 percent the prior week.

The share of active clients who said they were neutral rose to 50 percent from last week’s 67 percent. (Reporting by Richard Leong; Editing by David Gregorio)

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