Non-farm data becomes a touchstone for bulls in the bond market as traders increase positions betting on the continuation of the upward trend

According to the Zhitong Finance APP, bond traders who have rapidly built up long positions in U.S. Treasuries in recent weeks are now pinning their hopes on the U.S. June non-farm payroll report to provide more momentum for a rebound in the bond market. The June non-farm payroll report is the next major risk event facing bullish bond investors. Prior to this, data released on Tuesday showed that U.S. job openings unexpectedly surged in May, indicating that the labor market remains strong, which subsequently triggered a sell-off in the bond market.

Citigroup strategist David Bieber stated in a report, "Long positions in U.S. Treasuries continue to accumulate." He added that after a significant buildup of long positions over the past week, tactical positions are now "highly one-sided."

This phenomenon is also reflected in the U.S. Treasury futures market. According to open interest data from the Chicago Mercantile Exchange (CME), traders have continued to increase long positions during the recent rally in the bond market, pushing yields lower. In the 10-year Treasury futures contracts, the number of open contracts has surged, while the yield on the 10-year Treasury has fallen from over 4.4% to a low of 4.185% on Tuesday. In the 2-year Treasury futures, open positions have risen for 10 consecutive trading days.

The bullish momentum in the U.S. Treasury futures market is also reflected in the options market. On Monday, traders spent as much as $32 million to purchase an option betting on further increases in the 10-year Treasury.

However, at the same time, due to the high concentration of long positions in the U.S. Treasury market, if the employment market data fails to support expectations for the Federal Reserve to cut rates as early as next month, traders may begin to close their positions. Ed Al-Hussainy, global interest rate strategist at Columbia Threadneedle Investment, stated, "The market's long positions on the front end (short-term bonds) are somewhat concentrated, with expectations for a rate cut in July currently priced at about 20%. But if the employment data is unexpectedly strong, such as non-farm payrolls close to 200,000, this probability could drop to zero."

Therefore, the market's demand for hedging against rising yields remains. In Tuesday's operations in the Treasury market, some traders built hedging positions, betting that the yield on the 10-year Treasury will rebound to around 4.3% before the close on Thursday