UPDATE 1-Speculators pare bearish bets on U.S. 10-year T-note futures -CFTC

Fri Aug 23, 2013 5:11pm EDT

* Speculators pare bearish bets before July Fed minutes

* Net shorts in 10-year T-notes retreat from one-year high

* Speculative 5-year net longs lowest since January

Aug 23 (Reuters) - Speculators reduced bearish bets on U.S. 10-year Treasury note futures in the latest week before the Federal Reserve released the minutes of its July policy meeting, 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 41,592 contracts on Aug. 20, according to the CFTC's latest Commitments of Traders data.

A week ago, speculators held 66,432 net short positions in 10-year T-note futures, which was the highest weekly reading of net speculative shorts in 10-year Treasury note futures since late July 2012.

Prior to the release of the Fed minutes on Wednesday, some traders had hoped that the minutes would support the view that the central bank is not prepared to shrink its bond purchase program, known as QE3, as early as September.

However, the record on last month's policy meeting did little to dispel the notion the Fed is on track to dial back in its current $85 billion monthly bond purchases, as policymakers acknowledged the U.S. economy is expanding at a moderate pace.

Bond yields rose in reaction to the minutes and they subsequently hit two-year highs early Thursday before they rallied on Friday on a dismal July new home sales report.

Treasury 10-year T-note futures on the Chicago Board of Trade for September delivery closed up 21/32 on the day at 124-29/32, while the yield on cash 10-year Treasury notes fell 7.6 basis points to 2.816 percent, which was below its two-year high of 2.936 percent set on Thursday.

Speculators built up their long positions in longer-dated Treasury futures in the latest week, according to the latest weekly CFTC Commitments of Traders figures.

Speculators turned net long in 30-year bond futures for the first time since the beginning of the year. They had a net long by 15,934 contracts on Tuesday, which was the highest level of net longs since late April. This compared with a net short of 1,788 a week ago.

Speculators added to their net long in ultra-long T-bond futures in the latest week. Long trades exceeded short ones by 6,822 contracts on Tuesday, which was the highest net long level since Oct. 9, 2012, and up from 5,026 contracts a week earlier. .

Speculators' long positions in two-year T-note futures exceeded shorts by 50,372 contracts on Tuesday, little changed from the 50,518 contracts last week..

On the other hand, speculative net longs in five-year Treasury note futures fell to 9,080 contracts, down 33,328 from the previous week. The latest figure was the lowest level of net longs in five-year T-notes since mid-January, when speculators had a net short..

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