NEW YORK Jan 4 The margin on bearish bets on
longer-dated U.S. Treasuries over bullish positions shrank to
its smallest since late November as bargain-minded investors
emerged after the recent bond market selloff, a J.P. Morgan
survey released on Wednesday showed.
Some fund managers stepped up their Treasury purchases in
the latter half of December after the benchmark 10-year yield
hit 2.64 percent, the highest since September 2014,
after the Federal Reserve raised short-term interest rates by a
quarter point on Dec. 14, analysts said.
The share of "long" investors who said they were holding
more longer-dated U.S. government debt than their portfolio
benchmarks was 11 percent, matching the level on Dec. 12 when
J.P. Morgan released its last Treasury survey.
The firm's 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, tumbled to
20 percent from 39 percent three weeks earlier.
Nevertheless, short investors outnumbered long investors, or
net shorts, by nine percentage points, which was the lowest
since Nov. 28. That compared with 28 percentage points on Dec.
12, which was the biggest difference since June 28, 2015.
In addition to hints the Fed might increase interest rates
faster in 2017, inflation worries intensified following an
agreement among major oil producers to cut output, propelling
crude prices to an 18-month high.
Uneasiness about inflation stemming from a possible fiscal
stimulus package under a Trump administration has underpinned
the jump in longer-dated U.S. yields since the Nov. 8 election.
On Wednesday, the 10-year yield was last at
2.450 percent, unchanged from on Tuesday but up about 60 basis
points since Donald Trump's presidential victory.
The share of "neutral" investors, who said on Tuesday they
were holding amounts of longer-dated Treasuries that match their
benchmarks, rose to 69 percent, up from 50 percent on Dec. 12,
J.P. Morgan's survey showed.
(Reporting by Richard Leong; Editing by Meredith Mazzilli)