Investors turn more neutral on US Treasuries - survey

Tue Nov 6, 2012 10:57am EST

* All clients survey shows most neutrals since Aug. 27

* First time for no active client longs since June 25

NEW YORK Nov 6 (Reuters) - Investors turned more neutral in their outlook for U.S. government debt in advance of U.S. presidential elections and following data last week showing stronger-than-expected jobs growth in October, a survey released on Tuesday showed.

Ongoing concern over the economic impact from devastating storm Sandy that pummeled the Northeast last week also was likely raising caution over the level of Treasuries exposure.

The share of investors who said on Wednesday they were "neutral" U.S. government debt, or holding Treasuries equal to their portfolio benchmarks, rose to 70 percent from 68 percent the prior week, J.P. Morgan Securities said in its weekly Treasury client survey.

This was the highest level of neutral investors since Aug. 27.

The share of investors who said they were "long" Treasuries, or holding more government debt than their portfolio benchmarks, fell for a third week, slipping to 17 percent from 19 percent the previous week.

The share of investors who were "short", or holding fewer Treasuries than their benchmarks, was unchanged on the week at 13 percent, the latest J.P. Morgan survey showed.

Traders and investors seemed to agree the one thing they were looking for on Wednesday morning from U.S. presidential elections on Tuesday was a clear winner to emerge between Democratic President Barack Obama and his challenger Republican Mitt Romney.

Obama's election fortunes may have been given a bit of a boost late last week from the government's nonfarm payrolls report, which showed U.S. employers added 171,000 people to their payrolls in October.

In the latest J.P. Morgan survey, active clients including market makers and hedge funds, who are viewed as taking on speculative bets in Treasuries, pared their long and short positions in Treasuries for the second consecutive week.

The share of active clients who said they were long Treasuries fell to zero from 8 percent last week, while the share of shorts declined to 15 percent from 23 percent the prior week. It was the first time the active client survey showed no outright longs since June 25.

The percentage of active traders who were neutral rose to 85 percent from 69 percent the previous week.

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