(Bloomberg) -- The yield on the 30-year Treasury bond dropped to an all-time low as weak manufacturing data in the U.S. stoked concern about the global economic fallout of the coronavirus epidemic.

Yields fell as much as 7 basis points to 1.89% on Friday as the outbreak accelerated outside China, with South Korea reporting a surge in infections. The yield on long-dated bonds has fallen about half a percentage point so far in 2020. Treasury notes and bonds also rallied, with the 10-year reaching as low as 1.451% as the curve flattened.

“The coronavirus appears to be the primary driver here in the short term in a world where demand for duration is already high,” said Timothy High, a strategist at BNP Paribas. “There is considerable uncertainty as to how quickly the Chinese economy will ultimately recover from this tragedy and if the virus will spread around the world.”

Yield broke below the previous record low, set in August, after a report Friday showed U.S. business activity shrank in February for the first time since 2013. The August rally in Treasuries was fueled by recession fears, U.S.-China trade tensions and sliding yields in Europe. The 30-year yield subsequently rebounded to as high as 2.44% in November.

Yields resumed their slide in January, fueled mainly by the spread of coronavirus in and beyond China, where it affected the celebration of the Lunar New Year holiday. It gained momentum following the Jan. 29 Federal Reserve decision, when Chairman Jerome Powell said policy makers are uncomfortable with inflation below the central bank’s 2% target, and stalled briefly in early February as U.S. equity benchmarks recovered and reached new records.

--With assistance from Edward Bolingbroke and Alexandra Harris.

To contact the reporters on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net;Greg Ritchie in London at gritchie10@bloomberg.net

To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Elizabeth Stanton

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