* Survey shows most net Treasury longs in about 8 months
* Speculative positions turn flat from net short in week
NEW YORK, July 16 Investors raised their positions in longer-dated U.S. Treasuries holdings in the latest week as buying emerged after benchmark yields rose to near two-year highs a week earlier, according to a survey released on Tuesday.
J.P. Morgan Securities, which conducted the survey, said 21 percent of its Treasuries clients on Monday were "long" in their duration on U.S. government debt or owned more longer-dated Treasuries than their benchmarks, up from 15 percent last week.
By holding more longer-dated Treasuries, investors add duration or interest rate risk to their portfolios in anticipation of a market rally, when longer-dated bonds generate higher returns than shorter-dated debt.
Solid demand for last week's $66 billion worth of coupon-bearing supply, together with some weaker-than-expected economic data and dovish rhetoric from some Federal Reserve officials, fed appetite for U.S. government debt, analysts said.
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 them to compare their holdings against the benchmark bond market fund indices against which they gauge their performance.
In J.P. Morgan's latest survey, 13 percent of its Treasuries clients said they were "short" in duration of Treasuries, or owning fewer longer-dated Treasuries than their benchmarks, below the 19 percent a week earlier.
The share of "longs" exceeded "shorts" by 8 percentage points in the latest week, compared with a week ago when shorts outpaced longs by 4 points, J.P. Morgan said.
This was the highest level of net longs since Nov. 13, the firm said.
The share of investors who held Treasuries equal to benchmarks held steady at 66 percent.
Investors have been grappling with the notion the Federal Reserve might reduce its $85 billion monthly purchases of Treasuries and mortgage-backed securities if the economy gains traction.
Last Monday, benchmark 10-year Treasury yields rose to a 23-month high of 2.755 percent - a level not seen since August 2011, according to Reuters data. They last traded at 2.535 percent, down 0.8 basis point from late Monday.
The J.P. Morgan weekly survey breaks out a subset of 10 to 20 respondents, which it terms active for making speculative bets.
Among this group, 15 percent said they were long in duration versus their benchmarks, up from 8 percent a week ago.
The survey showed 15 percent in active "shorts," about half the 31 percent in the prior week.
Seventy percent said their longer-dated Treasuries holdings matched benchmarks, up from 61 percent the prior week.
Their equal shares of speculative longs and shorts suggested a stabilization in the Treasuries market ahead of Fed Chairman Ben Bernanke's two-day semi-annual testimony before Congress, which begins on Wednesday.
J.P. Morgan says the 70 percent of the active client subset in its survey consists of speculative accounts and the rest are money managers.