August 21, 2012 / 2:47 PM / 5 years ago

Investors stay mostly neutral on Treasuries outlook-survey

NEW YORK, Aug 21 (Reuters) - Investors remained mostly neutral on the outlook for U.S. government debt on the week in uncertainty over the outlook for Europe’s debt crisis and speculation whether the Federal Reserve will buy more debt in an effort to stimulate the economy.

The share of investors who said on Monday they were “neutral” on U.S. government debt, or holding Treasuries equal to their portfolio benchmarks, was 72 percent which was unchanged on the week, J.P. Morgan Securities said in its weekly Treasury client survey.

The share of investors who said they were “long” on U.S. government debt, or holding more Treasuries than their portfolio benchmarks, was also unchanged on the week at 19 percent.

The share of investors who were “short”, or holding fewer Treasuries than their benchmarks, held steady at 9 percent.

Investors are uncertain how the euro zone debt crisis will play out, and whether the Fed will introduce another round of quantitative easing in an effort to boost the economy.

Worries over Europe and the sluggish pace of global growth pushed benchmark 10-year Treasury note yields to a record low of 1.38 percent in late July. Ten-year yields were trading at 1.85 percent on Tuesday.

In J.P. Morgan’s latest survey, the share of active clients -- who are viewed as taking on speculative bets in Treasuries and include market makers and hedge funds -- with long positions fell to 8 percent from 15 percent the previous week.

The share of active clients who owned Treasuries equal to their benchmarks held steady at 77 percent, while the share of active traders who were short rose to 15 percent from 8 percent.

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