Bloomberg News

Treasuries Investors Stay Neutral Amid Economic Weakness, Europe

August 30, 2011

Aug. 30 (Bloomberg) -- Treasuries investors remained neutral in the latest week, as a weakened economic outlook and the European debt crisis kept curbed directional bets, according to an Aug. 29 survey by JPMorgan Chase & Co.

About 83 percent of the clients surveyed by the primary dealer were neutral, just less than the 85 percent in the previous week. About 13 percent were short, up from 11 percent of investors betting that the price of the securities would fall the previous week.

“Rates have already priced in a lot of economic weakness,” said Srini Ramaswamy, a JPMorgan strategist in New York, in a phone interview. “Except for the risk from Europe, there would be more investors positioning for higher rates.”

The percentage of investors in the survey betting that Treasury prices will increase was unchanged at four percent. The firm surveys clients on positions relative to the respondents’ benchmark. JPMorgan does not disclose the number of clients in the survey.

Commerce Department figures last week showed the economy grew at a 1 percent annual pace in the second quarter. GDP grew by 0.4 percent in the first quarter.

European confidence in the economic outlook plunged the most since December 2008 this month as a persistent debt crisis roiled markets and clouded growth prospects across the 17-nation euro region.

Yields on benchmark 10-year notes dropped eight basis points, to 2.18 percent in New York, according to Bloomberg Bond Trader prices.

--Editors: Paul Cox, Dave Liedtka

To contact the reporter on this story: Susanne Walker in New York at swalker33@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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