(Updates with market activity, analyst comment) By Ross Kerber Dec 7 (Reuters) - U.S. Treasury yields fell on Monday as rising coronavirus caseloads and new public health restrictions drove investors to buy the safe securities. The benchmark 10-year yield was down 4.3 basis points at 0.9261% in afternoon trading, flattening a key part of the yield curve. On Friday the yield on the note reached 0.986%, its highest level since March and close to the 1% threshold, on optimism that a poor jobs report would drive Washington to pass a new round of economic stimulus. Monday"s reversal showed the questions investors still face during a period when vaccines seem ready to end the pandemic but on an uncertain timeline while health statistics deteriorate, said Jason Pride, chief investment officer for private wealth at Glenmede. "This market is seeing volatility as people wrestle with this concept of having a vaccine and too-early reopenings" at the same time, he said. While the tech-heavy Nasdaq surged to an all-time high on Monday, the blue-chip Dow and the broad S&P 500 were both lower in afternoon trading. Kim Rupert, senior economist for Action Economics, said the higher demand for Treasuries on Monday seemed to reflect a buying opportunity for some investors and called the trading pattern "a corrective move." President-elect Joe Biden said he will nominate California Attorney General Xavier Becerra for secretary of health and human services on Monday as one of the top officials on his team to fight the pandemic. The U.S. daily death toll has exceeded 2,000 in recent days as officials prepare for a mammoth vaccination effort. Authorities in California on Monday compelled much of the most populous state to close shop and stay at home the day after it reported a record 30,000-plus new coronavirus cases. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 78 basis points, about 4 basis points lower than Friday"s close. At one point on Friday it reached 82.5 basis points, its highest since February 2018. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down almost a basis point at 0.1448% in afternoon trading. December 7 Monday 1:40PM New York / 1840 GMT Price Current Net Yield % Change (bps) Three-month bills 0.075 0.0761 -0.005 Six-month bills 0.09 0.0913 -0.003 Two-year note 99-246/256 0.1448 -0.008 Three-year note 100-38/256 0.1993 -0.014 Five-year note 99-236/256 0.3909 -0.032 Seven-year note 99-188/256 0.664 -0.040 10-year note 99-132/256 0.9261 -0.043 20-year bond 98-60/256 1.4776 -0.044 30-year bond 98-144/256 1.6863 -0.045 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.00 0.00 spread U.S. 3-year dollar swap 6.75 0.00 spread U.S. 5-year dollar swap 6.00 -0.50 spread U.S. 10-year dollar swap 0.25 -0.25 spread U.S. 30-year dollar swap -28.50 0.50 spread (Reporting by Ross Kerber in Boston; Editing by Andrea Ricci and Chizu Nomiyama)