July 24, 2018 / 1:19 PM / 4 months ago

U.S. Treasury investors most bearish in six weeks -survey

NEW YORK, July 24 (Reuters) - Bond investors turned the most bearish in six weeks on longer-dated U.S. Treasuries after Federal Reserve Chairman Jerome Powell offered an upbeat view on the economy to Congress last week, a J.P. Morgan survey showed on Tuesday.

The share of investors who said on Monday they were short, or holding fewer longer-dated U.S. government debt versus their portfolio benchmarks, rose to 28 percent from 23 percent a week earlier, according to the bank’s latest Treasury client survey.

The share of investors who said they were long, or holding more longer-dated Treasuries than their benchmarks, fell to 12 percent from 17 percent the prior week.

The gap between the shares of shorts and longs, or net shorts, grew to 16 percent, the widest since June 11. This compared with 6 percent a week earlier, J.P. Morgan said.

A week ago, Powell said before a Senate panel: “With appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years.”

His assessment supported the bets the Fed would consider raising short-term interest rates twice more in 2018, bringing the total number of rate hikes to four for the year.

Meanwhile, Powell downplayed the current friction between the Trump administration and major U.S. trade partners as a risk to business and consumer activities.

Early on Tuesday, the yield on benchmark 10-year Treasury notes was little changed on the day at 2.967 percent, hovering at its highest level in more than five weeks.

Those investors who told J.P. Morgan they were neutral, or holding longer-dated bonds matching their benchmarks, held at 60 percent for a second week. (Reporting by Richard Leong; Editing by Bernadette Baum)

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