NEW YORK, June 21 (Reuters) - Speculators raised U.S. 10-year Treasury note futures holdings before the Federal Reserve policy statement and Fed Chairman Ben Bernanke’s press conference on Wednesday, according to Commodity Futures Trading Commission data released on Friday.
The amount of bullish, or long, positions in 10-year Treasury futures from speculators exceeded bearish, or short, positions by 31,229 contracts on June 18, according to the CFTC’s latest Commitments of Traders data.
In contrast, there were 9,195 more speculative shorts in 10-year note futures than longs a week earlier..
“We believe that the increase in net longs ahead of the FOMC was likely due to expectations for the Fed to backpedal on tapering talk,” Gennadiy Goldberg, interest rate strategist at TD Securities, wrote in a note.
But the Fed, in fact, did much the opposite. Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. economy is expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.
A Reuters poll of primary dealers showed that most now see the Fed pulling back this year on its monthly $85 billion purchases of Treasuries and mortgage-backed securities. Many of those dealers, in fact, see a reduction coming as soon as September.
The 10-year note yielded 2.185 percent late on Tuesday, but Bernanke’s words sent that yield soaring above 2.5 percent to a near two-year high on Friday.
Speculators also pared bullish bets on five-year Treasury note futures. Speculative long trades in five-year Treasury note futures exceeded short positions by 60,339 contracts, down by 33,834 from the prior week.
In addition, speculators switched to a net long position in two-year Treasury futures, with long trades exceeding shorts by 25,489 contracts. Last week, in contrast, the net position stood at 2,133 short positions.
But speculators not only stayed short ultra-long T-bond futures, they added to that net position by 2,250 contracts to 27,995.
Speculators pared back their bearish bets in 30-year bond futures to a net short position of 276 contracts, down by 17,442 from the prior week.