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

NEW YORK, Oct 5 (Reuters) - Bond speculators raised their bullish bets on U.S. Treasuries futures earlier this week in advance of Friday's payroll data, according to Commodity Futures Trading Commission data released on Friday.

Their expectations reflected the view that U.S. job growth would fall short of expectations, boosting the likelihood of more bond purchases from the Federal Reserve and inflation staying muted. This scenario would increase the prices on Treasuries futures.

But the September payrolls report released earlier Friday came in stronger-than-expected with the jobless rate falling to 7.8 percent, the lowest since January 2009. The data sparked a sell-off in bonds in the cash and futures market with benchmark yields touching a three-week high.

Speculative long positions in 10-year Treasury futures rose to 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 increased by 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 45,364 contracts to 308,637 on Tuesday, the latest Commitments of Traders data showed.

On the other hand, speculative long bets on two-year T-notes dipped 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)(Reuters Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net))

Keywords: MARKETS BONDS CFTC/