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Speculators increase bets on U.S. bonds before jobs data

NEW YORK, Oct 5 (Reuters) - Bond speculators raised theirbullish bets on U.S. Treasuries futures earlier this week inadvance of Friday's payroll data, according to Commodity FuturesTrading Commission data released on Friday.

Their expectations reflected the view that U.S. job growthwould fall short of expectations, boosting the likelihood ofmore bond purchases from the Federal Reserve and inflationstaying muted. This scenario would increase the prices onTreasuries futures.

But the September payrolls report released earlier Fridaycame in stronger-than-expected with the jobless rate falling to7.8 percent, the lowest since January 2009. The data sparked asell-off in bonds in the cash and futures market with benchmarkyields touching a three-week high.

Speculative long positions in 10-year Treasury futures roseto 334,911 contracts on Oct 2, up 90,310 from a week earlier,according to CFTC's latest Commitments of Traders data.

Bullish bets that 30-year bond futures will rise increasedby 11,468 contracts to 53,200 on Tuesday.

Speculative bets on the Chicago Board of Trade's "ultra"bond contracts rose to 42,834 contracts, up 927 from last week.

Bullish bets that five-year, T-note futures rose 45,364contracts to 308,637 on Tuesday, the latest Commitments ofTraders data showed.

On the other hand, speculative long bets on two-year T-notesdipped to 314,563, down 761 contracts from the prior week.

(Reporting by Richard Leong; Editing by Leslie Gevirtz)

((richard.leong@thomsonreuters.com)(+1 646 303 6313)(ReutersMessaging: richard.leong.thomsonreuters.com@thomsonreuters.net))

Keywords: MARKETS BONDS CFTC/