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Investors' net shorts on U.S. Treasuries lowest since Nov -JPM
February 28, 2017 / 4:25 PM / 9 months ago

Investors' net shorts on U.S. Treasuries lowest since Nov -JPM

NEW YORK, Feb 28 (Reuters) - The margin on bearish bets on longer-dated U.S. Treasuries over bullish positions shrank to its narrowest level since before Donald Trump’s surprise U.S. presidential win in November, J.P. Morgan said on Tuesday.

Investors have scaled back their bearish bets on bonds as the Trump administration and the Republican-controlled U.S. Congress have shared few specifics on their pledges on tax cuts, looser regulations and infrastructure spending.

At the end of 2016, expectations on speedy implementations of these fiscal measures had stoked jitters about a spike in federal borrowing and inflation, which in turn caused a massive selloff in bond markets around the world.

Investors are awaiting possible details on Trump’s plans in his scheduled speech at 9 p.m. (0200 GMT Wednesday) before a joint session of Congress.

The share of “short” investors who said they were holding less longer-dated U.S. government debt than their portfolio benchmarks fell to 20 percent from 25 percent from the previous week, J.P. Morgan showed in its latest Treasury client survey.

The firm’s survey of clients includes 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, rose to 18 percent from 16 percent in the previous week.

Some fund managers have renewed their Treasury purchases since mid-December when the benchmark 10-year yield hit 2.64 percent, the highest since September 2014.

Early on Tuesday, the 10-year yield was 2.35 percent, down 1 basis point from late on Monday.

Short investors outnumbered long investors, or net shorts, by two percentage points, which was the smallest net short since Nov. 7. That was down from nine points last week.

The share of “neutral” investors, who said on Monday they were holding amounts of longer-dated Treasuries that match their benchmarks, rose to 62 percent from 59 percent, the survey showed. (Reporting by Richard Leong; Editing by Meredith Mazzilli)

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