TREASURIES-U.S. 10-year yield stays below 1% as coronavirus fears persist

    * Yield curve steepens for 2nd day
    * Biden's Super Tuesday victory debt-friendly-analyst
    * Upbeat U.S. economic data fails to lift market sentiment

 (Updates trading data, adds analyst comment, spread)
    By Karen Pierog and Gertrude Chavez-Dreyfuss
    NEW YORK, March 4 (Reuters) - U.S. benchmark Treasury
10-year yields largely hovered just below 1% on Wednesday, as
the bond market continued to digest the Federal Reserve's recent
rate cut in response to the  economic fallout from the rapidly
spreading coronavirus. 
    In its first inter-meeting move since the global financial
crisis in 2008, the Fed on Tuesday cut interest rates by half a
percentage point. That pushed 10-year yields below 1% for the
first time, setting a record low of 0.9060%.
    Robert Robis, chief fixed income strategist at BCA Research
in New York City, said Treasuries were still trading off the
rate cut, which overshadowed overnight presidential primary
results.
    "Bonds are catching a bid because of uncertainty," he said.
    As for Joe Biden's return to front-runner status over Bernie
Sanders in the Super Tuesday Democratic primaries, Robis said "a
Biden presidency sounds more debt-friendly than a Sanders
presidency."
    The yield curve continued to steepen on Wednesday, with the
spread between the two-year and 10-year widening to 34.40 basis
points from 29.8 basis points on Tuesday.
    Another key yield curve gauge also has steepened, with the
spread between three-month bills and 10-year notes at 28 basis
points, marking the widest spread since mid-January.  
    "What the Fed did yesterday ensures that the yield curve
will maintain some degree of steepness," said Dan Heckman,
senior fixed income strategist, at U.S. Bank Wealth Management
in Kansas City, Missouri. "Having a steep yield curve maintains
some level of confidence that ultimately we may not go into
recession, that we're just going to slow down economically."
    In afternoon trading, U.S. 10-year yields fell
to 1%, from 1.017% late on Tuesday.
    Yields on U.S. 30-year bonds were at 1.642%, up 
from 1.6302% on Tuesday. They touched an all-time trough of
1.507% the day before.
    On the short end of the curve, U.S. two-year yields fell to
0.649% from Tuesday's 0.729%. They touched 0.614%,
the lowest in nearly four years.
    Wednesday's data was solid, with the ADP National Employment
Report showing private payrolls rose by 183,000 jobs last month,
compared with a forecast of 170,000 new jobs.
    U.S. services sector activity also accelerated to a one-year
high in February, suggesting underlying strength in the economy.
The Institute for Supply Management (ISM) said on Wednesday its
non-manufacturing activity index increased to a reading of 57.3
last month, the highest level since February 2019, from 55.5 in
January.
    
      March 4 Wednesday 3:12PM New York / 2012 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.695        0.7078    -0.245
 Six-month bills               0.6525       0.6638    -0.189
 Two-year note                 100-238/256  0.6532    -0.076
 Three-year note               102-12/256   0.6725    -0.069
 Five-year note                101-224/256  0.7413    -0.032
 Seven-year note               101-144/256  0.8938    -0.022
 10-year note                  104-172/256  1.0053    -0.012
 30-year bond                  108-104/256  1.6434    0.012
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         5.25        -0.75    
 spread                                               
 U.S. 3-year dollar swap         5.00         0.50    
 spread                                               
 U.S. 5-year dollar swap         5.75         0.00    
 spread                                               
 U.S. 10-year dollar swap       -1.00         1.75    
 spread                                               
 U.S. 30-year dollar swap      -40.00         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Nick Zieminski and Tom Brown)
  

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