September 18, 2018 / 3:45 PM / 3 months ago

Investors net short in Treasuries falls to 7-week low - survey

NEW YORK, Sept 18 (Reuters) - Bond investors trimmed their bearish bets on longer-dated U.S. government debt on Monday to a seven-week low on heavy corporate bond supply and less safe-haven demand, a J.P. Morgan survey showed on Tuesday.

The margin of investors who said they were “short,” or holding fewer Treasuries than their portfolio benchmarks, over those who said they were “long” or holding more Treasuries than their benchmarks declined to 15 percent, the lowest since July 30. This was lower than 23 percent the week before, according to the survey.

Companies are expected to raise $25 billion to $30 billion in the investment-grade bond market this week after selling $33.4 billion in debt last week, according to IFR.

The share of investors who told J.P. Morgan on Monday they were neutral, or holding longer-dated bonds matching their benchmarks, was 55 percent, up from 51 percent the previous week, according to the bank’s latest Treasury client survey.

On Tuesday, the benchmark 10-year Treasury yield climbed to a four-month peak of 3.035 percent. It hit 3.128 percent in mid-May, which was the highest since July 2011, Reuters data showed.

Bond yields have also risen on remarks from Federal Reserve officials who signaled the central bank remains on its gradual rate hike path as the job conditions tighten further and inflation is at or near its 2-percent goal.

The Fed widely expected to raise key overnight borrowing costs by a quarter-point to a range of 2.00 percent to 2.25 percent at its policy meeting next Tuesday and Wednesday.

The bearish outlook on Treasuries persisted in the positioning data from the Commodity Futures Trading Commission.

Speculative net shorts in 10-year Treasury futures stood at 682,684 contracts on Sept. 11, not far below an all-time high set on Aug. 21, according to CFTC’s Commitments of Traders figures released on Friday.

Reporting by Richard Leong

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