Investors trim "long" positions in Treasuries: survey

NEW YORK Tue Nov 20, 2012 11:12am EST

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NEW YORK (Reuters) - Investors shed long positions in Treasuries built up in the wake of the U.S. presidential election, reflecting increased optimism the government will avert a looming budget crisis, a survey released on Tuesday showed.

The share of investors surveyed on Monday who said they were "long" U.S. government debt, or holding more Treasuries than their portfolio benchmarks, fell to 17 percent from 26 percent the prior week, J.P. Morgan Securities said in its weekly Treasury client survey.

The share of longs had jumped to 26 percent on November 13 from 17 percent the prior week as investors scrambled for safe-haven U.S. government debt, worried over whether President Barack Obama and a divided Congress can avert $600 billion of automatic tax hikes and spending cuts, known as the "fiscal cliff," that will phase in next year.

Investors have since come around to the idea that Congress might be able to reach a deal that would avert a budget crisis.

The share of investors who were "neutral" on Monday, or holding Treasuries equal to their benchmarks, rose to 68 percent from 59 percent the prior week.

The share of investors who said they were "short" Treasuries, or holding less government debt than their portfolio benchmarks, was unchanged from the prior week at 15 percent.

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, also reduced long positions and boosted neutral positions.

The share of longs among active traders fell to 8 percent from 23 percent last week, while the percentage of active traders who were neutral rose to 69 percent from 54 percent the prior week.

The share of active clients who were short was unchanged on the week at 23 percent.

(Reporting by Chris Reese; Editing by Dan Grebler)

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