TREASURIES-Yields climb as virus variant-induced investor panic ebbs

(Changes dateline to Chicago, recasts, updates yields, adds analyst comments) By Karen Pierog CHICAGO, Nov 29 (Reuters) - U.S. Treasury yields bounced higher on Monday amid a waning flight-to-safety bid that had been triggered by the detection of a new coronavirus variant last week, leading to the market's biggest rally since the onset of the pandemic. The benchmark 10-year yield, which dropped as low as 1.473% on Friday, was last up 7.4 basis points at 1.5586%. After tumbling to 1.161% last week, the five-year yield was last 4.1 bps higher at 1.2225%. Yields move inversely to prices. The two-year yield, which reflects short-term interest rate expectations, was last up 2.1 basis points at 0.5413%, giving back a bit of Friday's almost 14-basis-point drop -- the steepest daily fall since March 2020. "A lot of that panic is coming off today," said Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco, noting that "markets just jumped to an immediate conclusion" at the end of last week. Analysts said the emergence of the new variant, called Omicron, will likely keep investors on guard for a few weeks until more is known about its severity and response to vaccines. Wall Street opened higher, rebounding a bit from Friday's big drop. Meanwhile, month-end positioning this week might create some volatility in the Treasury market ahead of Friday's release of the U.S. government's November employment report and what it could mean in terms of Federal Reserve moves, according to Rupert. "I'm not sure (Fed Chair Jerome) Powell really needs a huge number to get maybe a speed-up of the (quantitative easing) taper next month," she said. "He was saying it was not one number he's interested in. He's looking at the cumulative effect and so far, the cumulative effect has been pretty decent." Yield curves steepened. A closely watched part of the curve that measures the gap between yields on two- and 10-year Treasury notes was last 4.1 basis points steeper at 101.4 basis points. The spread between five-year notes and 30-year bonds was last up 2.1 basis points at 67.70 basis points. November 29 Monday 9:46AM New York / 1446 GMT Price Current Net Yield % Change (bps) Three-month bills 0.05 0.0507 -0.002 Six-month bills 0.0925 0.0938 0.003 Two-year note 99-235/256 0.5413 0.021 Three-year note 99-184/256 0.8464 0.026 Five-year note 100-34/256 1.2225 0.041 Seven-year note 100-64/256 1.4623 0.055 10-year note 98-80/256 1.5586 0.074 20-year bond 100-156/256 1.9629 0.080 30-year bond 99-120/256 1.8983 0.068 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 23.00 0.25 spread U.S. 3-year dollar swap 22.50 1.25 spread U.S. 5-year dollar swap 11.25 0.75 spread U.S. 10-year dollar swap 5.00 0.50 spread U.S. 30-year dollar swap -17.00 0.75 spread (Reporting by Karen Pierog in Chicago and Tom Westbrook in Sydney Editing by Shri Navaratnam and Andrea Ricci)