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U.S. longer-dated bond net shorts at 2-mth high after French vote -JPMorgan
April 25, 2017 / 1:21 PM / 8 months ago

U.S. longer-dated bond net shorts at 2-mth high after French vote -JPMorgan

NEW YORK, April 25 (Reuters) - The margin of investors who are bearish on longer-dated U.S. Treasuries over those are bullish jumped to a two-month high after a tightly contested first round of the French presidential election on Sunday, J.P. Morgan’s latest Treasury client survey showed on Tuesday.

U.S. government debt had enjoyed safe-haven bids partly among investors who were nervous far-right Marine Le Pen and far-left Jean-Luc Melenchon, who have anti-EU stances, would face each other in a run-off.

On Sunday, centrist Emmanuel Macron and Le Pen were the top two vote-getters. Recent polls have shown Macron will beat Le Pen in the two-person race on May 7.

The first-round election results caused a rally in the euro and European stocks while sparking sales in Treasuries, the yen and other safe-haven assets on Monday.

The share of “short” investors who said they were holding fewer longer-dated U.S. government securities than their portfolio benchmarks rose to 22 percent from 18 percent in the prior week, according to the J.P. Morgan survey.

J.P. Morgan surveyed clients, including bond fund managers, central banks and sovereign wealth funds.

The share of “long” investors who said they were holding more longer-dated Treasuries than their benchmarks fell to 14 percent from 18 percent.

Short investors outnumbered long investors by eight points, the most since the week of Feb. 21. A week ago, they equaled each other.

On Tuesday, the yield on the benchmark 10-year Treasury rose to 2.31 percent from a five-month low of 2.17 percent set a week ago, according to Reuters data.

On the other hand, active clients, which included market makers and hedge funds, remained overall bullish on longer-dated Treasuries in the latest week, the J.P. Morgan survey showed.

Thirty percent of them said they were long; 10 percent of them said they were short and 60 percent of them said they were neutral, same as a week earlier. (Reporting by Richard Leong; Editing by Chizu Nomiyama)

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