UPDATE 1-Speculators turn short on U.S. 10-year Treasury note futures

Fri Jul 26, 2013 4:16pm EDT

NEW YORK, July 26 (Reuters) - Speculators turned bearish in the latest week on U.S. 10-year Treasury note futures as markets wondered whether the Federal Reserve might signal a pullback in bond buying as soon as September, according to Commodity Futures Trading Commission data released on Friday.

The amount of bearish, or short, positions in 10-year Treasury futures from speculators exceeded bullish, or long, positions by 32,312 contracts on July 23, according to the CFTC's latest Commitments of Traders data.

That was a contrast from the 17,735 net long contracts in the previous week, ahead of congressional testimony by Fed Chairman Ben Bernanke.

"We believe that the move into net short territory is consistent with the market positioning to sell post-testimony strength in Treasuries," wrote Gennadiy Goldberg, a U.S. strategist with TD Securities in a note to clients.

The Federal Reserve holds a two-day policy meeting next week. Analysts say policymakers could hint then at plans to slow the Fed's $85 billion per month buying in Treasuries and mortgage-backed securities.

Yields have risen sharply since late May on speculation such tapering could be nearing, with the 10-year note yield hitting a nearly two-year high earlier in July.

Nonfarm payrolls data for July are also due next week, on Friday. If that figure comes in better than expected - as June's data did - it could boost views that the Fed is preparing to wean the U.S. economy off the so-called quantitative easing program.

Speculators ramped up bullish bets on two-year Treasury note futures by 23,780 contracts to a net long 31,995 contracts.

But speculators were less keen on longer durations of U.S. government debt.

They cut their net longs in five-year Treasury note futures by 22,297 contracts to 59,346 contracts. In addition, they increased their net shorts in 30-year bond futures by 6,759 contracts to 14,949 and their net shorts in ultra-long T-bond futures by 2,461 contracts to 15,407.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article