Speculative bets against long US T-bonds rise to highest level since October

Bearish speculation against long-duration US Treasury bonds surged to its highest point since October as indications of continued robustness in the US economy maintained yields close to eight-week peaks, according to data from the Commodity Futures Trading Commission released on Friday.

In the week ending January 23, net short positions in US long bond Treasury futures climbed to 320,669 contracts, up from 312,178 the prior week. 

Meanwhile, net short positions in US 2-year Treasury futures reached their highest level since mid-December, totalling 1,268,885 contracts compared to slightly over 1.2 million the week before. 

The net short position against 5-year Treasuries also saw a slight uptick, rising to 1.23 million from 1.19 million the previous week.

However, speculators did not uniformly increase their bets against Treasuries. 

Net short positions in US 10-year Treasury futures edged lower to 778,346 contracts from 883,053 the previous week.

While Treasury yields retreated from near two-decade highs in October, following indications of moderating inflation prompting the Federal Reserve to signal potential interest rate cuts by the end of 2024, recent signs of sustained economic vigour in the US have nudged yields higher since their December troughs. 

The benchmark 10-year Treasury yield is currently hovering close to its highest level since December 12.

(With Reuters Inputs)