* U.S. to sell $27 billion 10-year notes at 1 p.m. * Rate cuts by Asian central bank spur more bond buying (Updates market action, adds quote, table) By Richard Leong NEW YORK, Aug 7 (Reuters) - U.S. Treasury yields tumbled on Wednesday, with 30-year yields nearing record lows, on growing fears over a global economic downturn and bets the Federal Reserve would have to pick up its pace of interest rate cuts to counter growing recession risks. A closely watched U.S. recession indicator, the premium on three-month Treasury bill rates over 10-year Treasury yields elevated to its highest level since March 2007. Bond yields fell around the world with German yields hitting record lows in negative territory. That came in the wake of several Asian central banks lowering their key interest rates to address growth concerns stemming from the escalating trade war between China and United States. Rate cuts in New Zealand, India and Thailand touched off a flood of buying of longer-dated bonds in Asia, which persisted into European and U.S. trading, analysts said. "The delivery of rate cuts from central banks overseas added fuel to the rally," said Jonathan Cohn, interest rate strategist at Credit Suisse in New York. Torrid demand for Treasuries is expected to support demand for $27 billion of 10-year government notes for sale at 1 p.m. ET. The 10-year note sale is part of this week's $84 billion quarterly refunding which is expected to raise $26.7 billion in cash for new federal spending. In "when-issued" activity, traders expected the latest 10-year note supply to fetch a yield of 1.637%, which would be a 3-year low at a 10-year note auction. On the open market, the yields on benchmark 10-year notes were 10.20 basis points lower at 1.6365%. They had fallen earlier to 1.595%, the lowest since October 2016. The prices on 30-year or long bonds were up 3 points in price, putting them on track for a sixth day of gains. Thirty-year yields were down 12.20 basis points at 2.1475% after it hit 2.123% earlier, which was not far from an all-time low of 2.089% set in July 2016, according to Refinitiv data. Longer-dated Treasuries posted a 6.02% total return over the prior five days, the biggest such gain since October 2011, according to an index compiled by Bloomberg and Barclays. Interest rates futures suggested traders are building bets the Fed would cut interest rates three more times by year-end to avert a recession. Investors' anxiety about a recession was underscored by the inversion between three-month bills and 10-year yields, which deepened to 39 basis points, a level not seen since March 2007. August 7 Wednesday 11:17AM New York / 1517 GMT Price US T BONDS SEP9 163-9/32 73/32 10YR TNotes SEP9 130-116/256 22/32 Price Current Net Yield % Change (bps) Three-month bills 1.98 2.0176 -0.031 Six-month bills 1.89 1.94 -0.062 Two-year note 100-100/256 1.5487 -0.062 Three-year note 100-14/256 1.4813 -0.070 Five-year note 101-88/256 1.4691 -0.077 Seven-year note 102-40/256 1.5478 -0.084 10-year note 106-164/256 1.6365 -0.102 30-year bond 115-240/256 2.1475 -0.122 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 8.60 -2.90 30-year vs 5-year yield 67.70 -4.00 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap -2.50 -2.25 spread U.S. 3-year dollar swap -5.00 -1.25 spread U.S. 5-year dollar swap -7.50 -1.75 spread U.S. 10-year dollar swap -12.00 -1.75 spread U.S. 30-year dollar swap -40.75 -1.50 spread (Reporting by Richard Leong; Editing by Bernadette Baum)
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