January 8, 2019 / 8:00 PM / 15 days ago

Investors turn bearish on U.S. bonds after rally: survey

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 7, 2019. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Bond investors turned bearish on longer-dated Treasuries following a year-end bond market rally tied to a safe-haven rush into government bonds stemming from anxiety about a global economic slowdown, a J.P. Morgan survey showed on Tuesday.

The margin of investors who said on Monday they were “short,” or holding fewer Treasuries than their portfolio benchmarks, over those who were “long,” or holding more Treasuries than their benchmarks, was 12 percent, compared with a net long of 4 percent on Dec. 17, according to the survey.This was the most net shorts in longer-dated Treasuries since Sept. 17, J.P. Morgan said.

On Tuesday, benchmark 10-year Treasury yields US10YT=RR were 2.710 percent. They were above the 2.543 percent reached last Friday, which was the lowest since Jan. 17, 2018. On Oct. 9, they hit a 7-1/2 year peak of 3.261 percent, according to Refinitiv data.

Thirteen percent of investors surveyed said they were long on U.S. government bonds, down from 25 percent on Dec. 17.

The share of investors who said they were short Treasuries increased to 25 percent from 21 percent.

The share of investors who said they were neutral, or holding Treasuries equal to their portfolio benchmarks, rose to 62 percent, their biggest share since Sept. 11, 2017. On Dec. 17, the share of neutral investors was 54 percent, J.P. Morgan said.

(Graphic: Investors positions in longer-dated US Treasuries - tmsnrt.rs/2OikPnI)

Reporting by Richard Leong; Editing by Richard Chang

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