March 2, 2018 / 9:38 PM / 4 months ago

UPDATE 1-Speculative U.S. 10-year T-note net shorts hit 1-year peak -CFTC

 (Adds details, background)
    NEW YORK, March 2 (Reuters) - Speculators' net bearish bets
on U.S. 10-year Treasury note futures rose to a one-year high
earlier this week as Federal Reserve Chairman Jerome Powell's
upbeat remarks on the economy raised bets on a faster pace of
interest rate hikes, according to Commodity Futures Trading
Commission data released on Friday.
    The amount of speculators' bearish, or short, positions in
10-year Treasury futures exceeded bullish, or long, positions by
342,889 contracts on Feb. 27, according to the CFTC's latest
Commitments of Traders data.
    A week earlier, speculators held 214,480 net short positions
in 10-year T-note futures.
    On Tuesday, Powell told the U.S. House Financial Services
Committee the economy has strengthened since December and he is
confident that inflation will rise. His remarks raised bets the
Fed may raise rates four times in 2018, one more than what
policy-makers projected in December.
    In response, traders sold shorter-dated Treasuries heavily,
propelling the two-year yield to a nine-year peak and
flattening the yield curve.
    The speculative net short in Eurodollar futures reached a
record peak at 3.19 million contracts on Feb. 27, reflecting
traders' view the U.S. central bank is open to hiking rates
faster if the economy picks up steam due to last year's tax cuts
and a stronger global backdrop.
    Meanwhile, concerns about a faster pace of rate increases
sparked a sell-off on Wall Street on Tuesday and Wednesday.
    On Thursday, Powell, in his return to Congress for the
second part of his semi-annual testimony on the economy as Fed
chief, told the Senate Banking Committee he did not see evidence
the economy is overheating.
    This provided some relief to the stock market and revived
some appetite for shorter-dated Treasuries. 
    Below is a table of the speculative positions in Treasury
futures on the Chicago Board of Trade and in Eurodollar futures
on the Chicago Mercantile Exchange in the latest week:
 U.S. 2-year T-notes (Contracts of $200,000) 
        27 Feb 2018       Prior week
        week           
 Long         314,522        395,533
 Short        419,469        552,485
 Net         -104,947       -156,952
 
U.S. 5-year T-notes (Contracts of $100,000) 
        27 Feb 2018       Prior week
        week           
 Long         510,479        636,080
 Short        962,356      1,063,663
 Net         -451,877       -427,583
 
U.S. 10-year T-notes (Contracts of $100,000) 
        27 Feb 2018       Prior week
        week           
 Long         542,104        681,539
 Short        884,993        896,019
 Net         -342,889       -214,480
 
U.S. T-bonds (Contracts of $100,000) 
        27 Feb 2018       Prior week
        week           
 Long         166,546        174,434
 Short        139,062        157,043
 Net           27,484         17,391
 
U.S. Ultra T-bonds (Contracts of $100,000) 
        27 Feb 2018       Prior week
        week           
 Long          52,516         47,382
 Short        211,068        208,420
 Net         -158,552       -161,038
 Eurodollar (Contracts of $1,000,000) 
        27 Feb 2018       Prior week
        week           
 Long         961,675        911,935
 Short      4,876,025      4,562,507
 Net       -3,914,350     -3,650,572
 Fed funds (Contracts of $1,000,000) 
        27 Feb 2018       Prior week
        week           
 Long         316,431        299,285
 Short        302,022        318,530
 Net           14,409        -19,245
 
 (Reporting by Richard Leong
Editing by James Dalgleish)
  
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