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Net shorts in U.S. long-dated bonds fall -JPM survey
August 5, 2014 / 1:55 PM / 3 years ago

Net shorts in U.S. long-dated bonds fall -JPM survey

NEW YORK, Aug 5 (Reuters) - The difference between the number of investors bearish on U.S. long-dated Treasuries against those who were bullish shrank to its smallest in six weeks, according to a J.P. Morgan survey.

This gap between those who were ‘short’ long-dated U.S. government debt and those who were ‘long’ contracted after a government report showed no wage growth in July, reducing worries about inflation accelerating and the Federal Reserve might raise interest rate sooner to prevent the economy from overheating.

The share of short investors exceeded the share of long investors by 21 percentage points, down from 29 points the previous week, according to J.P. Morgan Securities.

The share of short investors fell to 36 percent in the latest week ending Aug. 4, from 42 percent in the prior week.

By holding fewer longer-dated Treasuries, investors reduce the duration or interest rate risk of their portfolios in anticipation of a market drop, which generally causes longer-dated bonds to generate bigger losses than shorter-dated debt.

Conversely, longer-dated Treasuries produce higher returns than short-term debt in a market rally.

The share of long investors or those who said they held more longer-dated Treasuries than their benchmarks rose to 15 percent from 13 percent.

The share of neutral investors, or those who said they were holding long-dated securities equal to their portfolio benchmarks, rose to 49 percent from last week’s 45 percent.

Benchmark 10-year Treasuries yields was 2.500 percent early Tuesday, compared with 2.462 percent a week ago. (Reporting by Richard Leong; Editing by Bernadette Baum)

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