June 18, 2019 / 3:18 PM / 3 months ago

Investors turn bullish on U.S. Treasuries before Fed meeting - survey

June 18 (Reuters) - Bond investors turned bullish again on longer-dated U.S. Treasuries ahead of a Federal Reserve policy meeting where officials are expected to signal they are prepared to lower interest rates later this year, a J.P. Morgan survey showed on Tuesday.

The share of investors who said they were long or holding more longer-dated Treasuries than their benchmarks exceeded the share who said they were short or holding fewer longer-dated bonds than their benchmarks by 4 percentage points.

A week ago, the shares of longs and shorts were at parity.

Meanwhile, the share of investors who said they were neutral or holding longer-dated U.S. government debt equal to their portfolio benchmarks fell to 54%, down from the prior week’s 62%, which was the highest since Jan. 7, the latest J.P. Morgan survey showed.

Investors rebuilt their safe-haven Treasuries holdings on Monday in the wake of weaker-than-expected figures on business activity in New York state and home builder sentiment.

The recent spate of softer-than-expected data, together with jitters about a trade war between China and the United States, have fed bets the Federal Reserve would lower key lending rates multiple times later this year in a bid to preserve the current U.S. economic expansion, which would be the longest on record this summer.

On Tuesday, benchmark 10-year Treasury yields touched 2.016%, the lowest level since September 2017.

Active clients, which include market makers and hedge funds, reloaded their bullish bets on Treasuries, the latest J.P. Morgan survey showed.

Their net long position increased to 30% on Monday from last week’s 10%, which was the lowest since April 22.

Reporting by Richard Leong; editing by Jonathan Oatis

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