November 29, 2016 / 2:40 PM / a year ago

Investors pare net shorts on long-dated U.S. bonds -JP Morgan

NEW YORK, Nov 29 (Reuters) - The amount of bearish bets on longer-dated U.S. Treasury debt above bullish positions declined for a second week, according to a J.P. Morgan survey released on Tuesday, as the recent selloff in the U.S. bond market showed signs of subsiding.

Benchmark 10-year yields rose to their highest since July 2015 last week as traders had slashed their Treasury holdings on fears a Trump administration and a Republican-controlled U.S. Congress would cut taxes and boost government spending, stoking inflation through a surge in federal borrowing.

Since Monday, speculation about bond purchases for portfolio rebalancing at month-end has pushed down Treasury yields, analysts said.

The share of “long” investors who said they were holding longer-dated U.S. government debt than their portfolio benchmarks was unchanged for a second week at 14 percent, according to the survey conducted on Monday.

The share of “short” investors, who said they were holding fewer longer-dated Treasuries than their benchmarks, fell to 18 percent from 20 percent last week, J.P. Morgan said.

Short investors outnumbered long investors, or net shorts, by 4 percentage points, down from 6 points. Two weeks earlier, the margin was 12 percentage points, the biggest difference since January.

The share of “neutral” investors, who said on Monday they were holding amounts of longer-dated Treasuries that match their benchmarks, increased to 68 percent from 66 percent, the survey showed.

The 10-year Treasury yield was last at 2.34 percent early Tuesday, below the 2.42 percent reached last Wednesday. That was the highest since July 15, 2015, Reuters data showed. (Reporting by Richard Leong; Editing by Jeffrey Benkoe)

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