* 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,are butterscotch candies gluten free 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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