* European political uncertainty weighs on U.S. yields
* U.S. new home sales rise less than expected in January
* U.S. consumer sentiment eases in February
(Adds details, comments, byline, table)
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 24 U.S. long-dated Treasury debt
yields dropped to two-week lows on Friday, weighed down by
declines in Europe amid persistent political uncertainty as well
as a soft batch of U.S. data that suggested a more mixed outlook
for the world's largest economy.
U.S. two-year note yields, which move inversely to prices,
also slid to two-week troughs, along with that of U.S five-year
and seven-year notes.
In Europe, German two-year yields fell to
record lows, while France's 10-year bond yield hit
a one-month low at 0.94 percent in a flight to safety.
"I think we're rallying mostly from what's going in Europe,"
said Tom di Galoma, managing director at Seaport Global Holdings
in New York. "European governments are rallying and we're
benefiting from that."
France and its upcoming election remain front and center in
terms of political risks for European government bond traders.
Investors fear that far-right National Front leader Marine Le
Pen might win the presidential election this year and lead
France out of the euro zone. Current polls, however, show Le Pen
losing either to centrist Emmanuel Macron or right-wing Francois
Aside from France, there are also upcoming elections this
year in the Netherlands, Germany and possibly Italy.
In the United States, a lackluster set of U.S. data also
pressured bond yields, with new home sales growing less than
expected in January and consumer sentiment easing last month.
The Commerce Department said new home sales increased 3.7
percent to a seasonally adjusted annual rate of 555,000 units,
lower than the forecast of a 570,000-unit rate.
The University of Michigan surveys of consumer sentiment,
meanwhile, showed a final reading of 96.3 for February, down
from January's 98.5.
"It looks like the trend in the (new home sales) data has
weakened over the past few months, which could be a response to
the increase in mortgage rates," said Daniel Silver, economist
at JP Morgan in New York.
On Friday, the chances of a U.S. rate increase in March
dwindled to roughly 18 percent, from 22 percent on Thursday,
according to the CME's FedWatch.
In late morning trading, U.S. 10-year notes were
up 16/32 in price to yield 2.329 percent, compared with 2.388
percent late Thursday. Yields fell as low as 2.331 percent, the
lowest since Feb. 9.
U.S. 30-year bond prices also rose, up more than
1 point, yielding 2.973 percent, down from Thursday's 3.023
percent. U.S. 30-year yields also touched a two-week low of
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler)