NEW YORK Jan 14 Investors raised their holdings
of longer-dated Treasuries after news of surprisingly weak jobs
growth in December which stirred doubts about the economic
recovery, according to a survey released on Tuesday by J.P.
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 rose to 19 percent from
13 percent a week earlier, J.P. Morgan Securities said.
By holding more longer-dated Treasuries, investors raise the
duration, or interest rate, risk to their portfolios in
anticipation of a market rally, which generally causes
longer-dated bonds to generate larger gains than shorter-dated
Conversely, longer-dated Treasuries would also raise the
risk of greater losses than short-term bonds if bond prices
On Friday, the Labor Department said U.S. employers added
74,000 jobs last month, the fewest in nearly three years.
Analysts polled by Reuters had expected 200,000 or so increase.
The stunningly weak payroll figure spurred a rally in the
U.S. bond market.
Treasuries' yields have risen on worries whether the Federal
Reserve might speed up its pace of stimulus reduction and
perhaps even raise short-term interest rates soon after it ends
its third round of quantitative easing.
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, down from 72 percent last week.
Seventeen percent of its Treasuries clients said they were
"short" in duration of Treasuries, or owning fewer longer-dated
Treasuries than the benchmarks against which their portfolios
are gauged, up from 15 percent last week.
The share of "longs" exceeded "shorts" for the first time
since late November. A week ago, the share of shorts topped
longs by 2 percentage points, J.P. Morgan said.
In early Tuesday trading, benchmark 10-year Treasury yields
rose 3 basis points to 2.85 percent after hitting a
three-week low of 2.819 percent on Monday.
Among active clients, viewed as making speculative bets in
Treasuries, 23 percent said they held more longer-dated
Treasuries than their benchmarks, unchanged from last week,
while 62 percent of active investors said their longer-dated
Treasuries holdings matched benchmarks, up from 54 percent the
Fifteen percent of the active clients said they were short
in duration versus their benchmarks, down from 23 percent last
week. The latest figure was the lowest since Sept. 23.
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.