TREASURIES-Yields fall on new coronavirus concerns, 10-year touches new record low

 (Updates with market activity, adds new record low yield)
    By Ross Kerber
    BOSTON, Feb 26 (Reuters) - U.S. bonds rallied on Wednesday,
pushing the benchmark 10-year Treasury yield to a record low for
the second consecutive day, as traders adjusted portfolios
against risks the spreading coronavirus epidemic would have a
significant economic impact.
    The 10-year yield was down 2.5 basis points in
afternoon trading at 1.3055%, after hitting 1.3072% on Tuesday. 
    Major stock indexes were also down on concerns about the
virus' possible spread in the United States. 
    Factors included a report by officials in Nassau County, New
York, that they were monitoring 83 people who had visited China
and may have come in contact with the coronavirus, although
Governor Andrew Cuomo said the state has had no confirmed cases
so far.
    "The bond market is still saying there are problems out
there," said Cantor Fitzgerald Treasury analyst Justin Lederer,
before yields dropped several basis points starting around 1:30
p.m. ET.
    Earlier in the session 10-year Treasury yields were as high
as 1.382%.
    "I wouldn't say these yields are attractive; it's more a
place to park cash," said Jim Barnes, director of fixed income
at Bryn Mawr Trust.
    Investors have been cautious as the U.S. Centers for Disease
Control and Prevention urged Americans to prepare for the virus
to spread in the United States.
    New Commerce Department data on Wednesday showed sales of
new U.S. single-family homes raced to a 12-1/2-year high in
January, indicating housing market strength that could help
blunt any hit to the economy from the coronavirus and keep the
longest economic expansion in history on track.
    On Wednesday the U.S. Treasury Department said it accepted
$41 billion in bids for five-year notes out of $100.7 billion
worth of public bids tendered, at a high yield of 1.15%.
    Primary dealers accounted for 28.7% of competitive bids
accepted, somewhat higher than the 23.4% average, according to a
research note from BMO Capital Markets.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 5.2
basis points at 1.1389% in afternoon trading.
     
    
      February 26 Wednesday 2:43PM New York / 1943 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.4875       1.518     -0.013
 Six-month bills               1.39         1.4232    -0.031
 Two-year note                 99-249/256   1.1389    -0.052
 Three-year note               100-192/256  1.1173    -0.038
 Five-year note                101-48/256   1.1264    -0.031
 Seven-year note               101-214/256  1.2227    -0.028
 10-year note                  101-208/256  1.3055    -0.025
 30-year bond                  104-216/256  1.7904    -0.013
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         3.75         2.00    
 spread                                               
 U.S. 3-year dollar swap         1.25         0.25    
 spread                                               
 U.S. 5-year dollar swap         0.25         0.50    
 spread                                               
 U.S. 10-year dollar swap       -5.75         0.75    
 spread                                               
 U.S. 30-year dollar swap      -37.50         1.00    
 spread                                               
 
 (Reporting by Ross Kerber; Editing by Bernadette Baum, Tom
Brown and Richard Chang)
  

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