NEW YORK Dec 13 The margin on bearish bets on
longer-dated U.S. Treasuries over bullish positions surged to
its widest level in about 1-1/2 years in advance of the Federal
Reserve's last policy meeting of 2016, according to a J.P.
Morgan survey released on Tuesday.
Traders widely expected the U.S. central bank to raise
short-term interest rates by a quarter point at its two-day
policy meeting due to begin later on Tuesday, prompted by an
improving jobs market and signs of rising inflation.
Benchmark 10-year Treasury yields reached 2.528 percent on
Monday, their highest since September 2014, as inflation worries
intensified following an agreement among major oil producers to
cut output, propelling crude prices to an 18-month high.
Uneasiness about inflation from a possible package of fiscal
stimulus under a Trump administration has underpinned the jump
in longer-dated U.S. yields since the Nov. 8 election.
On Tuesday, the 10-year yield was last at 2.460
percent, down 2 basis points from late on Monday but up about 60
basis points since Trump's presidential victory.
The share of "long" investors who said they were holding more
longer-dated U.S. government debt than their portfolio
benchmarks fell to 11 percent after being at 14 percent for
three straight weeks, J.P. Morgan said in the survey conducted
on Dec. 12.
The firm's weekly survey of clients include bond fund
managers, central banks and sovereign wealth funds.
The share of "short" investors, who said they were holding
fewer longer-dated Treasuries than their benchmarks, jumped to
39 percent from 27 percent last week, J.P. Morgan said.
Short investors outnumbered long investors, or net shorts, by
28 percentage points, the biggest difference since June 28, 2015
and a jump from net shorts of 13 percentage points a week ago.
The share of "neutral" investors, who said on Monday they
were holding amounts of longer-dated Treasuries that match their
benchmarks, fell to 50 percent from 59 percent, J.P. Morgan's
(Reporting by Richard Leong; Editing by Meredith Mazzilli)