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

By Ross Kerber

(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)