Speculative bullish bets on US bond futures rise on Bernanke
NEW YORK, March 1 (Reuters) - Bond speculators raised bullish bets on U.S. 10-year Treasury futures earlier this week after Federal Reserve Chairman Ben Bernanke reiterated the central bank's commitment to buy bonds in a bid to support the U.S. economic recovery, according to Commodity Futures Trading Commission data released on Friday. Prior to Bernanke's semi-annual testimony before Congress on the economy and monetary policy on Tuesday and Wednesday, traders were worried about the Fed curbing its bond purchases before the end of year due to encouraging data on the housing market and growing risk from the Fed's balance sheet that has ballooned to more than $3 trillion. Anxiety about the political standoff in Italy and the looming set of automatic federal spending cuts from the "sequestration" also fed bids for Treasuries this week. "The positioning largely reflects the recent rally in Treasuries, showing the market unable to sustain its brief net short in the Treasury space," Gennadiy Goldberg, an interest rate strategist with TD Securities wrote in a note on Friday. Speculators' net long positions in 10-year Treasury futures jumped to 115,908 contracts on Tuesday, its highest level since December, from 53,288 a week earlier, according to the CFTC's latest Commitments of Traders data. On Friday, 10-year Treasury futures closed 8/32 higher at 132-30/32, while the yield on cash 10-year Treasury notes finished down 3 basis points at 1.85 percent. Ten-year T-note futures touched their highest level in about two months, while the 10-year cash yield hovered above its lowest level in more than a month. In the meantime, speculators raised their net bullish or long bets in two-year Treasury futures and Eurodollar futures. Net speculative long bets on two-year T-notes jumped to 139,976 contracts, more than double the 58,920 last week. There were 414,010 more long positions in Eurodollar futures contracts on Tuesday versus 241,446 a week earlier. This was the highest level of net longs so far this year. There were little changed in the net short positions in long-dated T-note contracts. There were 17,668 more speculative short positions in 30-year Treasury bond futures versus bullish or long positions on Tuesday. A week earlier, there were 17,695 more speculative shorts in T-bond futures than longs. Bond speculators also remained bearish on the Chicago Board of Trade's "ultra" bond contracts. There were 26,461 more speculative short positions than longs in the "ultra" contracts on Tuesday, a touch more than the 25,989 net shorts a week ago, the data showed. "The market may still be bracing for higher long-end rates," Goldberg said. In the meantime, speculators pared their net speculative long bets on five-year T-note futures, which fell to 53,826 contracts from 63,433 the prior week, the data showed.
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