August 11, 2009 / 7:29 PM / in 9 years

Fewest bullish Treasury investors since Jan-poll

NEW YORK, Aug 11 (Reuters) - The number of investors bullish on U.S. Treasuries fell to the lowest level since January amid signs of economic stabilization and the flood of debt supply, according to a poll on Tuesday.

Benchmark Treasury yields reached two-month highs last week in response to a government report that showed a smaller-than-expected loss of 247,000 non-farm jobs in July.

Traders were also bracing for this week’s record $75 billion quarterly refunding, which began on Tuesday with a $37 billion auction of new three-year notes US3YT=RR.

Prior to the start of the refunding, the share of investors who said on Monday they were “long,” or owning more Treasuries than their portfolio benchmarks, slipped to 18 percent -- the lowest since the week of Jan. 26 -- from 22 percent last week, J.P. Morgan said.

The share of investors who said they were “short,” or owning fewer Treasuries than their portfolio benchmarks, rose to 18 percent from 16 percent a week ago, the firm said.

Investors who said they had a “neutral” stance, holding Treasuries equal to their portfolio benchmarks, rebounded to 64 percent, up from 62 percent last week and equal to the level two weeks ago.

The survey’s active clients, including market makers and hedge funds, also turned more defensive in the latest week.

This group, which said they were “short” Treasuries, dipped to 3 percent from 4 percent a week ago, while those who said they were “neutral” rose to 7 percent from 4 percent.

The share of active clients who said they were “long” Treasuries fell to 1 percent from 3 percent a week earlier.

The yield on benchmark 10-year Treasury notes US10YT=RR was 3.69 percent late Tuesday afternoon, up from 3.61 percent a week earlier.

Despite investors’ increased caution, demand at Tuesday’s three-year debt sale was robust with heavy indirect bids that include those from foreign central banks. For details, see [ID:nN11495130]. (Reporting by Richard Leong; Editing by Kenneth Barry)

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