March 5, 2019 / 9:06 PM / 8 months ago

UPDATE 1-Speculative U.S. 2-year T-note net shorts post record drop -CFTC

    * Speculators cut Eurodollar net shorts to lowest since Sept
    * Speculative 10-year T-note net shorts hit near two-month
    * Speculators raise ultra bond net shorts to record peak

 (Adds details on latest data)
    March 5 (Reuters) - Speculators slashed their net bearish
positions on U.S. two-year Treasury note futures by a record
amount in late February amid expectations the Federal Reserve
would refrain from raising interest rates in 2019, Commodity
Futures Trading Commission data released on Tuesday showed.
    Speculative net short bets in two-year T-note futures fell
to 144,747 contracts on Feb. 26, down by 190,097 from the prior
week. This marked the steepest decline of these Treasury
contracts since this data series began in the mid-1990s.
    Signs of a slowing economy have spurred speculation the U.S.
central bank would halt its rate-hiking campaign that began in
December 2015. 
    On Feb. 26, Fed Chairman Jerome Powell told the Senate
Banking Committee the bank was in "no rush to make a judgment"
about further changes to interest rates.
    Speculators reduced their net shorts in Eurodollar futures
for a fourth straight week to 930,804 contracts, the lowest
reading since September 2016.
    They trimmed their net shorts in federal funds futures to
185,825 contracts.
    While Powell and other Fed officials have signaled
short-term borrowing costs may hold steady in the coming months,
a few have floated the idea the Fed may tolerate inflation
rising above its 2-percent goal to make up for missing it for a
number of years. 
    If the Fed adopts this stance on inflation, this could put
upward pressure on longer-dated bond yields, which would erode
their prices, analysts said.
    The amount of speculators' bearish, or short, positions in
10-year Treasury futures exceeded bullish, or long, positions by
233,995 contracts on Feb. 26, the highest in about two months,
according to the CFTC's latest Commitments of Traders data
    A week earlier, speculators held 215,091 net short positions
in 10-year T-note futures.
    Speculators reversed their net positions in Treasury bond
futures in late February. They were net short by 34,702
contracts, compared with a week earlier when they were net long
by 1,368 contracts.
    Their net shorts in ultra bond futures reached a record high
at 319,137 contracts on Feb. 26.
    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) 
        Feb. 26, 2019     Prior week
 Long         705,195        595,177
 Short        849,942        930,021
 Net         -144,747       -334,844
U.S. 5-year T-notes (Contracts of $100,000) 
        Feb. 26, 2019     Prior week
 Long         784,547        806,730
 Short        969,672        985,329
 Net         -185,125       -178,599
U.S. 10-year T-notes (Contracts of $100,000) 
        Feb. 26, 2019     Prior week
 Long         662,362        702,945
 Short        896,357        918,036
 Net         -233,995       -215,091
U.S. T-bonds (Contracts of $100,000) 
        Feb. 26, 2019     Prior week
 Long         149,203        157,326
 Short        183,905        155,958
 Net          -34,702          1,368
U.S. Ultra T-bonds (Contracts of $100,000) 
        Feb. 26, 2019     Prior week
 Long         112,240        111,785
 Short        431,377        421,507
 Net         -319,137       -309,722
 Eurodollar (Contracts of $1,000,000) 
        Feb. 26, 2019     Prior week
 Long         997,339        908,764
 Short      1,928,143      2,059,661
 Net         -930,804     -1,150,897
 Fed funds (Contracts of $1,000,000) 
        Feb. 26, 2019     Prior week
 Long         245,397        226,388
 Short        431,222        416,755
 Net         -185,825       -190,367
 (Reporting by Richard Leong; editing by Jonathan Oatis and
James Dalgleish)
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