UPDATE 1-US Treasury two-year note futures' net shorts hit largest since December -CFTC

(Adds details on other maturities, table, byline, analyst comment) By Gertrude Chavez-Dreyfuss NEW YORK, Feb 2 (Reuters) - Speculators raised bearish bets on U.S. Treasury two-year note futures, pushing their net shorts to their largest since the week of Dec. 12, Commodity Futures Trading Commission data showed on Friday, reflecting expectations rates will rise further. Speculators' net short positions on two-year Treasury futures hit 130,7001 contracts in the week ended Jan. 30, the highest in more than two weeks, according to the CFTC's latest Commitments of Traders data. Net shorts on benchmark 10-year futures also increased in the latest week to 859,015 contracts, as did shorts on U.S. Treasury bond futures to 137,502 contracts . The increase in net short positioning in both the two-year and the long-end of the curve represented by 10-year and Treasury bond futures suggested further upside in Treasury yields. This expectation came after upbeat U.S. economic data that suggested the Federal Reserve could delay cutting interest rates to later in the year. The central bank on Wednesday kept its benchmark overnight interest rate in the 5.25%-5.50% range, unchanged since July. Fed Chair Jerome Powell said that would likely mark the peak, but rate cuts would only come once policymakers have "greater confidence that inflation is moving sustainably down to 2%." But economic data has been resilient so far, suggesting the Fed would be in no rush to start easing rates. On Friday, the U.S. economy created 353,000 new jobs in January across a broad range of sectors, with hourly earnings up 4.5% from a year earlier. These numbers were higher than the most optimistic numbers. Following the jobs data, 10-year yields posted their biggest daily gain since September 2022, while those on the two-year had their largest one-day rise since May 2023. The January jobs report followed an equally strong gross domestic product growth for the fourth quarter of 2023. Traders on Friday have priced in a 21% chance of a rate cut in March, down from 38% on Thursday, and a 75% probability for May, down from 94%, according to the CME Group’s FedWatch Tool. "It (jobs report) really challenges and questions the narrative on Fed rate cuts," said Dan Boardman-Weston, chief executive officer, at BRI Wealth Management in London. "On Wednesday, the Fed pushed back on March hikes and said it would be data dependent. This (report) forces markets to recalibrate their thoughts on May rate cuts as well. It continues to show the economy is in very, very strong position." 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) 30 Jan 2024 Prior week week 361,700 390,426 Long 1,668,701 1,659,311 Short -1,307,001 -1,268,885 Net U.S. 5-year T-notes (Contracts of $100,000) 30 Jan 2024 Prior week week 474,604 481,506 Long 1,667,582 1,712,695 Short -1,192,978 -1,231,189 Net U.S. 10-year T-notes (Contracts of $100,000) 30 Jan 2024 Prior week week 476,861 480,223 Long 1,335,876 1,264,901 Short -859,015 -784,678 Net U.S. T-bonds (Contracts of $100,000) 30 Jan 2024 Prior week week 174,607 176,767 Long 312,109 305,778 Short -137,502 -129,011 Net U.S. Ultra T-bonds (Contracts of $100,000) 30 Jan 2024 Prior week week 159,581 160,975 Long 490,049 492,084 Short -330,468 -331,109 Net Fed funds (Contracts of $1,000,000) 30 Jan 2024 Prior week week 213,115 240,298 Long 369,195 315,677 Short -156,080 -75,379 Net (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Medha Singh in Bengalaru; Editing by Lisa Shumaker)