NEW YORK (Reuters) - Bond investors were the most bullish on U.S. longer-dated government debt since late May ahead of a Federal Reserve meeting where policymakers are widely expected to lower interest rates for the first time in a decade, a J.P. Morgan weekly survey showed on Tuesday.
The share of investors who said they are “long” or hold more longer-dated Treasuries than their portfolio benchmarks exceeded those investors who said they are “short” or hold fewer longer-term government debt issues than their benchmarks by 13 percentage points.
This was the highest level of net longs since May 28, J.P. Morgan said.
Investors were net long by 5 percentage points a week earlier.
(GRAPHIC - Investors positions in longer-dated US Treasuries: tmsnrt.rs/2V9OjHR)
Traders and investors widely expect the Fed to lower short-term borrowing costs for the first time in a decade on Wednesday.
A number of Fed officials including Chairman Jerome Powell have signaled they are prepared to lower rates to counter risks from trade conflicts and softening global demand.
Some economists have argued there is no need to ease rates right now as the labor market remains solid.
The Federal Open Market Committee, the central bank’s policy-setting group, is scheduled to announce its decision on rates at 2 p.m. EDT (1800 GMT) on Wednesday.
U.S. interest rates futures suggested traders are fully positioned for at least a quarter-percentage-point rate decrease on Wednesday, CME Group’s FedWatch program showed.
(GRAPHIC - Bets on bold first rate-cut from the Fed: tmsnrt.rs/2XTkkpn)
Reporting by Richard Leong; Editing by Susan Thomas and Paul Simao