UPDATE 1-US Treasury 10-year futures' net shorts fall, front-end shorts rise -CFTC data

(Adds other CFTC contracts, byline, analyst comment, CFTC table) By Gertrude Chavez-Dreyfuss NEW YORK, April 5 (Reuters) - Speculators pared back bearish bets on U.S. Treasury 10-year note futures, pushing their net shorts in the latest week to their lowest level since roughly mid-December, Commodity Futures Trading Commission data showed on Friday. Net shorts on the benchmark 10-year note futures fell to 569,957 contracts, the smallest level since the week of Dec. 12, according to the CFTC's latest Commitments of Traders data in the week ended April 2. In the prior week, net shorts on 10-year note futures were 578,307. The fall in net shorts on the 10-year suggested market participants believed 10-year yields have likely peaked. The benchmark 10-year yield hit 4.429% this week, the highest since late November. It has since pulled back and was last at 4.397%. However, other market players think there is room for 10-year yields to rise further. "When we look at yields, they look fairly attractive and the back-up is actually compelling," said George Bory, chief investment strategist for fixed income at Allspring Global Investments. "Could 10-year yields go back up to 4.50%? Yes, they certainly could. And that's where the trend is pointing at." On the shorter end of the curve, net short positions on two-year futures rose in the latest week to 934,574 contracts, compared with net shorts the previous week of 913,896. Net short bets on five-year futures also grew 1,284,301 contracts, from shorts of 1,149,510 the week before, data showed. The rise in short positions on the front end indicated that market participants think the Federal Reserve could delay cutting interest rates, keeping short-term yields elevated. Friday's strong nonfarm payrolls report certainly kept that narrative going, with the Fed not expected to be in any rush to lower interest rates. U.S. nonfarm payrolls grew by 303,000 jobs in March compared with expectations for an increase of 200,000, data showed. Following the jobs data, the U.S. rate futures market has reduced the odds of a June rate cut to 53.3%, down from 66% late on Thursday, the CME's FedWatch tool showed. The market has also pared back expectations for rate cuts to fewer than three this year, from three to four a few weeks ago, according to LSEG's rate probability app. In other contracts, net shorts on U.S. bonds increased to -55,690 contracts from -20,585. U.S. long T-bonds' short bets also rose to -313,453 contracts from -298,605, data showed. Below is a table of the speculative positions in Treasury futures on the Chicago Board of Trade in the latest week: U.S. 2-year T-notes (Contracts of $200,000) 02 Apr 2024 week Prior week Long 442,394 443,015 Short 1,376,968 1,356,911 Net -934,574 -913,896 U.S. 5-year T-notes (Contracts of $100,000) 02 Apr 2024 week Prior week Long 374,032 402,675 Short 1,658,333 1,552,185 Net -1,284,301 -1,149,510 U.S. 10-year T-notes (Contracts of $100,000) 02 Apr 2024 week Prior week Long 445,011 413,026 Short 1,014,968 991,333 Net -569,957 -578,307 U.S. T-bonds (Contracts of $100,000) 02 Apr 2024 week Prior week Long 235,043 235,484 Short 290,733 256,069 Net -55,690 -20,585 U.S. Long T-bonds (Contracts of $100,000) 02 Apr 2024 week Prior week Long 144,656 139,824 Short 458,109 438,429 Net -313,453 -298,605 Fed funds (Contracts of $1,000,000) 02 Apr 2024 week Prior week Long 227,865 206,167 Short 301,080 386,096 Net -73,215 -179,929 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Leslie Adler and Josie Kao)