UPDATE 1-Speculators turn bullish on U.S. 10-year notes -CFTC

Fri Jun 7, 2013 4:23pm EDT

NEW YORK, June 7 (Reuters) - Speculators in the latest week turned bullish on U.S. 10-year Treasury note futures after weaker-than-expected factory data pared worries the Federal Reserve might reduce its bond purchases later this year, Commodity Futures Trading Commission data showed on Friday.

The amount of bullish, or long, positions in 10-year Treasury futures from speculators exceeded bearish, or short, positions by 19,684 contracts on June 4, according to the CFTC's latest Commitments of Traders data.

There were 35,505 more speculative shorts in 10-year note futures than longs a week earlier. That was the most speculative net shorts in 10-year T-notes since March 12, when they totaled 57,346.

September 10-year Treasury futures fell 25/32 to 129 on Friday, while the yield on cash 10-year Treasury notes rose 9 basis points to 2.168 percent, according to Reuters data.

On Monday, the Institute for Supply Management said its index on U.S. manufacturing activity fell to its lowest in four years in May, suggesting the economy might be slowing and requiring high levels of stimulus from the U.S. central bank.

But a mildly better-than-expected payroll report for May released on Friday rekindled concerns the economy might be strong enough for the Fed to consider scaling back its bond purchases as soon as the third quarter, analysts said. Investors sold bonds in reaction to the latest jobs report.

Worries about the Fed paring its $85 billion monthly purchases of Treasuries and mortgage-backed securities have spurred selling in U.S. Treasuries in recent weeks. U.S. Treasury yields jumped to 13-month-plus highs last week.

Speculators also turned more bullish on medium- and longer-dated Treasury maturities before the jobs data, but raised their bearish bets on shorter maturities, according to the latest weekly CFTC Commitments of Traders figures.

Speculative long trades in five-year Treasury note futures exceeded short positions by 140,929 contracts, up 83,226 from the prior week.

Speculators turned net long in 30-year bond futures by 2,369 contracts on Tuesday, compared with a net short total of 27,251 contracts from a week earlier.

The net shorts in "ultra" long T-bond futures shrank slightly by 887 contracts to 30,584 in the latest week.

However, speculators' short positions in two-year T-note futures exceeded their longs by 33,608 contracts on Tuesday. A week earlier, they held 17,580 more shorts in two-year T-notes than longs.

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