March 1, 2013 / 9:33 PM / in 5 years

Speculative bullish bets on US bond futures rise on Bernanke

NEW YORK, March 1 (Reuters) - Bond speculators raised
bullish bets on U.S. 10-year Treasury futures earlier this week
after Federal Reserve Chairman Ben Bernanke reiterated the
central bank's commitment to buy bonds in a bid to support the
U.S. economic recovery, according to Commodity Futures Trading
Commission data released on Friday.
    Prior to Bernanke's semi-annual testimony before Congress on
the economy and monetary policy on Tuesday and Wednesday,
traders were worried about the Fed curbing its bond purchases
before the end of year due to encouraging data on the housing
market and growing risk from the Fed's balance sheet that has
ballooned to more than $3 trillion. 
    Anxiety about the political standoff in Italy and the
looming set of automatic federal spending cuts from the
"sequestration" also fed bids for Treasuries this week.
    "The positioning largely reflects the recent rally in
Treasuries, showing the market unable to sustain its brief net
short in the Treasury space," Gennadiy Goldberg, an interest
rate strategist with TD Securities wrote in a note on Friday.
    Speculators' net long positions in 10-year Treasury futures
jumped to 115,908 contracts on Tuesday, its highest level since
December, from 53,288 a week earlier, according to the CFTC's
latest Commitments of Traders data. 
    On Friday, 10-year Treasury futures closed 8/32 higher at
132-30/32, while the yield on cash 10-year Treasury notes
 finished down 3 basis points at 1.85 percent. 
    Ten-year T-note futures touched their highest level in about
two months, while the 10-year cash yield hovered above its
lowest level in more than a month. 
    In the meantime, speculators raised their net bullish or
long bets in two-year Treasury futures and Eurodollar futures. 
    Net speculative long bets on two-year T-notes jumped
to 139,976 contracts, more than double the 58,920 last week. 
    There were 414,010 more long positions in Eurodollar futures
 contracts on Tuesday versus 241,446 a week earlier. This
was the highest level of net longs so far this year. 
    There were little changed in the net short positions in
long-dated T-note contracts.
    There were 17,668 more speculative short positions in
30-year Treasury bond futures versus bullish or long positions
on Tuesday. A week earlier, there were 17,695 more speculative
shorts in T-bond futures than longs. 
    Bond speculators also remained bearish on the Chicago Board
of Trade's "ultra" bond contracts.
    There were 26,461 more speculative short positions than
longs in the "ultra" contracts on Tuesday, a touch more than the
25,989 net shorts a week ago, the data showed. 
    "The market may still be bracing for higher long-end rates,"
Goldberg said.
    In the meantime, speculators pared their net speculative
long bets on five-year T-note futures, which fell to 53,826
contracts from 63,433 the prior week, the data showed.
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