July 9, 2019 / 3:49 PM / 10 days ago

UPDATE 1-Investors turn net short on U.S. bonds after jobs data -survey

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NEW YORK, July 9 (Reuters) - Bond investors were the most bearish on U.S. longer-dated government debt in nearly three months as a solid June payrolls report pared bets on a deep interest rate cut by the Federal Reserve later this month, a J.P. Morgan weekly survey showed on Tuesday.

The share of investors who said they are “short” or hold fewer longer-dated Treasuries than their portfolio benchmarks exceeded those investors who said they are “long” or hold more longer-term government debt issues than their benchmarks by 2 percentage points. They swung from being net long by 6 percentage points a week ago, J.P. Morgan said.

Last Friday, the Labor Department said U.S. nonfarm payrolls grew by 224,000 in June, more than the 160,000 forecast among economists polled by Reuters. The June figure was more than three times the hiring reported for May.

The stronger-than-expected acceleration in U.S. job growth scaled back bets the Fed would lower key lending rates by half a percentage point at the end of July, while traders still positioned for a possible quarter-point rate decrease, based on U.S. interest rates futures.

The June payrolls report has led to some selling in Treasuries, propelling benchmark 10-year yields above the 1.939% reached last week, which was their lowest since November 2016. On Tuesday, they were at 2.054%, up 2 basis points on the day.

The share of investors who said on Monday they were long longer-dated Treasuries fell to 19% from 25% a week earlier.

The share of investors who said they were short rose to 21% from 19%, while the percentage of investors who said they were neutral was 60%, up from 56%.

Among active clients, which includes market makers and hedge funds, the percentage who said they are bullish on longer-dated Treasuries dropped to 10% from 40% in the previous week, the latest J.P. Morgan survey showed.

The share of active clients who said they are neutral jumped to 70% from 40%, while the share of active investors who said they are short longer-dated Treasuries was unchanged at 20%.

Reporting by Richard Leong Editing by Paul Simao

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