Investors most neutral on U.S. bonds in two months: J.P. Morgan

November 1, 2016 11:51 AM EDT

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NEW YORK (Reuters) - Investors were the most neutral on longer-dated U.S. Treasuries in two months ahead of a two-day Federal Reserve meeting where policymakers were expected to leave interest rates unchanged, according to a J.P. Morgan survey released on Tuesday.

Some U.S. central bank officials have said the economy has met or is close to meeting the Fed's goal on employment and is expected to reach its 2 percent inflation target. These conditions allow the Fed to consider increasing rates from its current target range of 0.25-0.50 percent.

The Fed raised rates for the first time in nearly a decade by a quarter point in December 2015.

Fed policymakers would like to see more data before hiking rates again and prefer to wait until after the Nov. 8 U.S. presidential election, analysts said.

The share of "neutral" investors, who said on Monday they were holding amounts of longer-dated Treasuries that match their benchmarks, rose to 66 percent, the highest since Aug. 29, J.P. Morgan's survey showed.

A week earlier, the share of neutral investors was 59 percent.

The share of "long" investors who said they were holding more longer-dated U.S. government debt than their portfolio benchmarks fell to 16 percent from 23 percent a week ago.

The share of "short" investors, who said they were holding fewer longer-dated Treasuries than their benchmarks, was unchanged from last week at 18 percent, J.P. Morgan said.

Short investors outnumbered long investors, or net shorts, by 2 percentage points. This compared with net longs of 5 points last week, which was the most net longs since Sept. 26.

In Tuesday trading, the benchmark 10-year Treasury note yield was 1.858 percent, up over 2 basis points from late on Monday. It touched 1.879 percent earlier on Tuesday, matching a near five-month peak set last week.

(Reporting by Richard Leong; Editing by Meredith Mazzilli)



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