Last Friday was expiration day for March futures contracts and with it, the Commitment of Traders (COT) reports for Treasury notes of all maturities changed sharply in one way or another.

For the 2-year Treasury note, large speculators showed a net bearish position for only the second week in the last year while the commercial hedgers showed a net bullish position for the first time since last September.

On the COT for the 5-year Treasury note, commercial hedgers showed a net bullish position for the first time in the past year while large speculators have the smallest net long position of the past year.

The COT for the 10-year note showed the commercial hedgers have the largest net long position of the past year while the large speculators have the biggest short position of the past year.

So what does all of this mean? Despite indications by the Fed that they intend to keep the federal funds rate low through the end of 2014, Treasury notes are traded on the open market and investors see big changes in the rates.

If you look at the net changes for all three maturities, you can see that large speculators are becoming more bearish towards Treasuries of all length maturities. When investors are bearish on treasuries it means they are bullish on the yield.

The bottom line is that commercial hedgers and large speculators foresee a rising interest rate environment in the future for United States Treasury notes, even if the Fed doesn’t want that.