UPDATE 1-Speculators pare bearish bets on U.S. bond futures-CFTC

Fri Sep 27, 2013 4:12pm EDT

Sept 27 (Reuters) - Speculators reduced net bearish bets on U.S. 10-year Treasury note futures in the latest week, prompted by worries about a possible government shutdown, according to Commodity Futures Trading Commission data released on Friday.

The amount of speculators' bearish, or short, positions in 10-year Treasury note futures exceeded bullish, or long, positions by 89,107 contracts on Sept. 24, according to the CFTC's latest Commitments of Traders data.

A week ago, speculators held 126,026 net short positions in 10-year T-note futures, which was the most net shorts since May 22, 2012.

U.S. 10-year Treasury note futures on the Chicago Board of Trade for December delivery rose 7/32 in price on the day at 126-10/32, their highest since Aug. 13.

In the cash market, the yield on 10-year Treasury notes fell 2 basis points to 2.626 percent after earlier hitting its lowest level in more than five weeks.

Investors shifted money into lower-risk government debt from stocks in anticipation of a partial federal shutdown next week due to the political gridlock over spending and abolishment of healthcare reform.

The mood about bonds, however, remained bearish overall on the view the Federal Reserve will shrink its bond-buying stimulus program, which has held longer-dated Treasury yields.

Speculative net shorts in five-year Treasury note futures fell to 124,065 contracts from last week's 139,477, which was the most since January 2008.

Speculators' short positions in two-year T-note futures exceeded longs by 19,178 contracts on Tuesday, compared with a net short of 46,220 contracts last week, which was the biggest net short since March 2012.

Net short ultra-long T-bond futures in the latest week fell to 1,232 contracts on Tuesday from 6,115 contracts in the prior week.

Meanwhile, speculators pared their net long in 30-year bond futures to 6,700 contracts on Tuesday from 37,195 contracts a week ago, according to the latest weekly CFTC Commitments of Traders figures.

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