RTRS: Bonds rally on economic gloom fuels safety bids
*Treasuries rally after jobless data raise recession fears
*Two-year note yield post series of record lows
*Ten-year yield falls to lowest in 5-1/2 years
*Thirty-year yield declines to lowest since early 1960s
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By Richard Leong
NEW YORK, Nov 20 (Reuters) - The U.S. government debt market rallied on Thursday, sending the two-year note yield at record low, as recession fears hammered global stock markets and spurred safety bids for bonds and cash.
The benchmark 10-year Treasury yield fell to its lowest in nearly 5-1/2 years after a jump in weekly jobless claims fanned anxiety about a steep, prolonged economic downturn and pushed major stock indexes .DJI down 1 percent in early trading.
"Obviously they (claims) were really weak ... consistent with a very sharp slowdown in the labor market," said Carl Lantz, U.S. interest rate strategist with Credit Suisse in New York. "It points toward still higher Treasury prices."
Weekly jobless claims climbed to a 16-year high last week, while continued claims broke above the 4 million mark in the week ended Nov. 8 to their highest since December 1982, the government said on Thursday. For more see [ID:nN20394100].
The demand for Treasuries was intense across all maturities with pronounced buying in the long end, as insurers and pension funds sought to lock in assets that earn stable, long-term income so they can meet future payouts, analysts said.
The 30-year Treasury bond surged more than 3 points with its yield dropping to 3.74 percent, a level not seen since the early 1960s, according to Reuters data.
In other data, the Philadelphia Federal Reserve will release its monthly business activity index in the Mid-Atlantic region at 10 a.m. (1500 GMT). The median forecast among analysts polled by Reuters was minus 35.00 in November, compared with an 18-year low of minus 37.50 in October.
On the supply front, the U.S. Treasury Department will announce at 11 a.m. (1600 GMT) the amounts of two-year and five-year notes it will auction next week.
The price on two-year U.S. government notes was up 4/32. Its yield, which moves inversely to price, was 1.00 percent, a record low, compared with 1.07 percent late on Wednesday.
Benchmark 10-year notes traded up 1-8/32 with the yield falling to 3.19 percent from 3.34 late on Wednesday. (Additional reporting by Burton Frierson; Editing by James Dalgleish)
