US yields slide as virus outbreak erodes economic data

• US 10-year and 30-year yields dropped to two-week lows, while those on two-year notes slid to a new three-year trough. The yield curve also continued to flatten.

NEW YORK: US Treasury yields fell for a third straight session on Thursday, pressured by more data showing how the coronavirus outbreak has choked the world's largest economy, as debates mounted about reopening businesses in the United States.

U.S. 10-year and 30-year yields dropped to two-week lows, while those on two-year notes slid to a new three-year trough. The yield curve also continued to flatten.

Thursday's data showed initial claims for state unemployment benefits dropped to a seasonally adjusted 5.245 million for the week ended April 11. A total of 22.034 million people have filed claims for jobless benefits since March 21.

U.S. housing numbers, meanwhile, were worse than expected, along with the Philadelphia Fed business conditions index, which was the lowest since 1980.

U.S. yields were little changed after the data.

"There are more cross-currents today. Stocks opened with some optimism and it was able to withstand some more ugly data. I think we're getting inured to that," said Kim Rupert, managing director, global fixed income analysis, at Action Economics in San Francisco.

"There has also been difficult news on the impact of the coronavirus. I think those cross-currents are keeping a bid on Treasuries," she added.

Bond investors though are looking ahead to restarting the U.S. economy almost a month after the pandemic shut it down.

U.S. President Donald Trump will release new guidelines on Thursday evening on reopening the U.S. economy, backed by medical experts on his coronavirus task force, to serve as recommendations for states, a senior White House official said.

In afternoon trading, U.S. 10-year yields fell to 0.607%, from 0.641% late on Wednesday.

"Since rates are so low, they don't have a lot of room to rally too hard," said Patrick Leary, chief market strategist, at broker-dealer Incapital. "So we're kind of stuck in this range of 0.6% to 0.8%."

Yields on U.S. 30-year bonds were at 1.208%, down from 1.275% on Wednesday.

On the short end of the curve, U.S. two-year yields were last at 0.202%, down from Wednesday's 0.205%. Earlier in the session, two-year yields sank to 0.187%, the lowest since April 2017.

The yield curve flattened for a second straight day on Thursday, with the spread between the 10-year and two-year narrowing to 41 basis points, from 43 basis points on Wednesday. It was the flattest in  more than a week.

The curve has steepened since the beginning of the outbreak as investors have piled into short-term debt, having ruled out rate hikes in the immediate future.