From Richard Leong: NEW YORK (Reuters) – Investors remained bullish on longer-dated U.S. Treasuries for a sixth consecutive week on worries about a slowing economy and expectations inflation will stay muted despite a tight domestic labor market, a J.P. Morgan survey showed on Tuesday.
The margin of investors who said they were “long,” or holding more Treasuries than their portfolio benchmarks, over those who said they were “short,” or holding fewer Treasuries than their benchmarks, increased to nine percentage points from 7 points the prior week, according to the survey.
Three weeks ago, the gap between longs and shorts rose to 11 percentage points, the highest since September 2016.
The survey results come the same day Fed policymakers begin a two-day meeting at which they are expected to leave interest rates unchanged.Twenty-eight percent of the investors surveyed said on Monday for a third straight week they were long on U.S. government bonds, the J.P. Morgan survey showed.
The share of investors who said they were short Treasuries fell to 19 percent from 21 percent a week ago.
The percentage of investors who said they were “neutral,” or holding Treasuries equal to their portfolio benchmarks, edged up to 53 percent from 51 percent the week before, J.P. Morgan said.
Positions among active clients, which include market makers and hedge funds, showed no bearish bets on longer-dated Treasuries. Active net longs rose to 30 percent, the highest since May 2018, while the share of these clients who said they were neutral increased to 70 percent from 60 percent.
In early Tuesday trading, the yield on the benchmark 10-year Treasury was 2.6267 percent, up from 2.6050 percent a week ago.
(GRAPHIC: Investors positions in longer-dated U.S. Treasuries – tmsnrt.rs/2V9OjHR)
Reporting by Richard Leong; Editing by Steve Orlofsky
The iShares 20+ Year Treasury Bond ETF (TLT) rose $0.03 (+0.02%) in after-hours trading Tuesday. Year-to-date, TLT has declined -3.49%, versus a 6.25% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Reuters.