* Worries about U.S. debt ceiling fight feeds bids for bonds
* Most outright longs on Treasuries since November
* Active longs in Treasuries highest since early December
NEW YORK, Jan 15 The number of investors who are
bullish on U.S. Treasuries rose to the highest level in two
months due to worries about a protracted fight in Washington
over raising the debt ceiling, a survey released on Tuesday
Investors seemed more concerned right now about another
political standoff that hurts risk appetite, analysts said.
The United States scraped up against its $16.4 trillion
debt ceiling on Dec. 31 and is now employing special measures to
meet its financial obligations. The Treasury Department said
those steps could be exhausted by mid-February. [ID: nL2N0AJDXD]
The prospect of no agreement on raising the debt ceiling
could lead to scenarios including a default on U.S. bonds and
downgrades of its credit rating, which then would reduce the
longer-term appeal of Treasuries, analysts said.
But as of Monday, when J.P. Morgan Securities conducted its
latest weekly Treasury client survey, the share of investors who
were "long", or holding more Treasuries than their benchmarks,
was 21 percent, rising from 19 percent the previous week,
The latest figure showed the most long investors since Nov.
13, 2012, the firm said.
The level of short positions in the previous survey
conducted last Monday held steady at 15 percent.
The share of investors surveyed on Monday who said they were
"neutral" on U.S. government debt, or holding Treasuries equal
to their portfolio benchmarks, fell to 64 percent from 66
percent the previous week.
In addition to anxiety about a debt ceiling fight, traders
sought longer-dated Treasuries to resell to the Federal Reserve
which has been accumulating government debt in a bid to lower
long-term interest rates to support the economy.
Benchmark 10-year Treasury notes were up 9/32 in price early
Tuesday, yielding 1.815 percent, down 3 basis points from late
on Monday. Last week, the 10-year yield climbed near 2 percent
its highest level in eight months.
Within the survey, more active clients, including market
makers and hedge funds, who are viewed as taking on speculative
bets in Treasuries, expected Treasury yields to fall.
The share of longs among active clients jumped to 15
percent, the highest since Dec. 3, from 8 percent last week.
The share of shorts among active clients fell to 31 percent
from 38 percent, while the share of neutral was unchanged at 54