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Investors turn more bearish on longer-dated U.S. Treasuries: JPM

Published 04/26/2016, 10:59 AM
Updated 04/26/2016, 11:00 AM
© Reuters.  Investors turn more bearish on longer-dated U.S. Treasuries: JPM

NEW YORK (Reuters) - Investors who are bearish on longer-dated U.S. Treasuries outnumbered those bullish on them by the most in six weeks ahead of the Federal Reserve's interest rate decision on Wednesday, according to a J.P. Morgan survey released on Tuesday.

Most analysts expected the Federal Open Market Committee, the U.S. central bank's policy-setting group, won't raise key interest rates from the current 0.25-0.50 percent target range at its two-day meeting amid evidence of slowing domestic economic growth. They forecast the FOMC would hike rates by a quarter point at its June meeting, a Reuters poll released last week showed.

Longer-dated Treasury yields have risen in recent days with the 10-year yield hitting its highest in nearly five weeks earlier on Tuesday. [US/]

J.P. Morgan's latest survey showed the share of "short" investors, who said on Monday they were holding less longer-dated U.S. government debt than their portfolio benchmarks, rose to 21 percent from 16 percent in the prior week.

The share of "long" investors, who said they were holding more longer-dated Treasuries than their benchmarks, fell to 18 percent from 20 percent, J.P. Morgan said.

With 3 percentage points more short investors than long investors, that difference was the biggest since March 14, J.P. Morgan said.

A week ago, the share of long investors was greater than the share of short investors by 4 percentage points.

The share of "neutral" investors, who said they were holding amounts of longer-dated Treasuries that match their benchmarks, fell to 61 percent from 64 percent.

On Tuesday, the benchmark 10-year Treasury yield was 1.920 percent, up more than 1 basis point from Monday. Earlier on Tuesday, it reached 1.925 percent, the highest since March 23, according to Reuters data.

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