Investors hold US Treasury positions in week -poll
Tue Jul 25, 2006 1
NEW YORK, July 25 (Reuters) - Investors stuck to their Treasury positions after last week's rally on perceived dovish remarks by Federal Reserve Chairman Ben Bernanke in testimony to Congress, a poll released on Tuesday showed.
Overall Treasury holdings among investors polled on Monday by J.P. Morgan Securities were unchanged from last week.
The last time the survey was unchanged from week to week was in April 2004, the bank said.
Bernanke's tame inflation view led traders to scale back expectations that the Fed will raise interest rates for an 18th straight time at its Aug. 8 policy meeting.
U.S. rate futures <FFQ6> implied that traders are pricing in about a 50 percent chance of an August rate increase after peaking at 90 percent prior to Bernanke's remarks.
However, Bernanke's perceived dovish outlook did not wipe out the market's worries about rising price pressures from stubbornly high energy prices and a tight labor market.
Prior to Bernanke's testimony, Treasury yields were rising on inflation fears spurred by stronger-than-expected readings on producer and consumer prices in June.
On Tuesday, benchmark 10-year Treasury notes <US10YT> were down 4/32 in price for a yield of 5.07 percent, up 2 basis points from late Monday but down 7 from a week ago.
Investors surveyed on Monday who said they were "short" Treasuries, or held less U.S. government securities than their benchmarks, held steady from last week at 42 percent, J.P. Morgan Securities said.
The share of investors polled who said they were "long" Treasuries, or held more U.S. government securities than their benchmarks, were unchanged at 16 percent, the firm said.
Investors surveyed who were "neutral" or held Treasuries equal to benchmarks, was unchanged at 42 percent, it said.
The share of active clients, including market makers and hedge funds, who said they were "short" clients in Treasuries rose to 6 percent from prior week's 5 percent, while the share of active "long" clients was unchanged at 1 percent, J.P. Morgan said.