Investors pare longer-dated Treasuries before U.S. jobs data-survey
NEW YORK Dec 3 (Reuters) - Investors pared their holdings of longer-dated Treasuries in the latest week in advance of the government's release of the U.S. November payrolls report on Friday, according to a survey released on Tuesday by J.P. Morgan Securities.
Investors are worried another month of 200,000 or so non-farm jobs growth might spur the U.S. Federal Reserve to shrink its bond purchase stimulus earlier they have thought.
Most Wall Street analysts reckoned the U.S. central bank would taper its third round of quantitative easing in March, while some traders bet it might happen at the Dec. 17-18 policy meeting.
Economists recently polled by Reuters forecast U.S. employers likely added 180,000 workers to their payrolls in November following hiring of 204,000 new staff in October.
The share of investors who said on Monday that their holdings of longer-dated U.S. government debt were greater than their holdings of portfolio benchmarks fell to 13 percent from 21 percent a week earlier, J.P. Morgan Securities said.
By holding fewer longer-dated Treasuries, investors reduce the duration, or interest rate, risk to their portfolios in anticipation of a market decline, which generally causes longer-dated bonds to generate bigger losses than shorter-dated debt.
In J.P. Morgan's survey of its Treasuries clients, 64 percent said they were "neutral" in their duration on U.S. government debt, or owned longer-dated Treasuries equal to their benchmarks, up from 60 percent last week.
Twenty-three percent of its Treasuries clients said they were "short" in duration of Treasuries, or owning fewer longer-dated Treasuries than their benchmarks, up from 19 percent a week earlier.
The share of "shorts" exceeded "longs" in the latest week by 10 percentage points, which was the highest level of net shorts since June 24. A week ago, the share of longs topped shorts by 2 points, J.P. Morgan said.
In early Tuesday trading, benchmark 10-year Treasury yields fell 3 basis points to 2.773 percent. A week ago, the 10-year yield was 2.696 percent.
Among active clients, viewed as making speculative bets in Treasuries, 8 percent said they held more longer-dated Treasuries than their benchmarks, down from 23 percent last week, while 38 percent said they were short in duration versus their benchmarks, up from 31 percent last week.
Fifty-four percent of active investors said their longer-dated Treasuries holdings matched benchmarks, up from 46 percent the prior week.
J.P. Morgan surveys 40 to 60 of its Treasuries clients weekly, of which 60 percent are fund managers, 25 percent are speculative accounts, and 15 percent are central banks and sovereign wealth funds.
It asks 10 to 20 of its active clients each week about their Treasuries holdings, of which 70 percent are speculative accounts and the rest are money managers.
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