(Adds fresh prices, Gundlach tweet) By Karen Brettell and Herbert Lash NEW YORK, Jan 15 (Reuters) - U.S. Treasury yields fell on Friday after retail sales data came in below economists" expectations and following President-elect Joe Biden"s proposed $1.9 trillion stimulus program. Yields jumped ahead of Biden’s announcement late on Thursday that he hopes to jump-start the weakened U.S. economy and accelerate the distribution of vaccines to bring the coronavirus under control with the new funds. But yields came back down following the announcement and dropped further after data on Friday showed worse-than-expected retail sales for December. Renewed measures to slow the spread of COVID-19 undercut spending at restaurants and reduced traffic to shopping malls, the Commerce Department said. Benchmark 10-year yields US10YT-RR fell to 1.094%, from 1.138% on Thursday before Biden’s announcement. They are down from a 10-month high of 1.187% reached on Tuesday. Retail sales dropped 0.7% last month, while the data for November was revised down to show sales declined 1.4% instead of 1.1% as previously reported. Economists polled by Reuters had forecast retail sales would be unchanged in December. "This morning"s disappointing retail sales figures reinforced the idea that more stimulus will be needed," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York. The rate increases earlier this week likely went too far given "we have a global pandemic, we have the Fed continuing to buy bonds, we have weak economic data," Lyngen added. Bonds were also boosted by safety buying as stocks dropped sharply, before recovering later in the day. The yield curve between two-year and 10-year notes flattened to 95.5 basis points. The yield gap has compressed from 103 basis points on Tuesday, which was the widest since May 2017. Inflation expectations were little changed on the day with 10-year Treasury inflation-protected securities (TIPS) pricing in average inflation of 2.09% per year for the next decade. Yields spiked earlier this week as the Treasury Department prepared to sell new long-dated debt and on concerns that an improving economic outlook will prompt the Fed to reduce its record bond buying. But they have fallen since Tuesday after the 10-year and 30-year auctions saw strong investor demand and as Fed speakers said the economy will continue to need strong support for years. Jeffrey Gundlach, chief executive of investment management firm Doubleline, said in a tweet that demand for longer-dated debt from Asian investors seems to be rising and that yields have peaked, at least for the short term. With the U.S. economy still far from its inflation and employment goals, it is too early for the Federal Reserve to discuss changing its monthly bond purchases, Fed Chair Jerome Powell said Thursday. The Treasury will sell $24 billion in 20-year bonds on Wednesday and $15 billion in 10-year TIPS on Thursday. January 15 Friday 2:25PM New York / 1925 GMT Price Current Net Yield % Change (bps) Three-month bills 0.08 0.0811 0.000 Six-month bills 0.09 0.0913 0.000 Two-year note 99-250/256 0.137 -0.010 Three-year note 99-192/256 0.2089 -0.015 Five-year note 99-158/256 0.4533 -0.031 Seven-year note 98-248/256 0.7778 -0.037 10-year note 97-248/256 1.0937 -0.035 20-year bond 95-112/256 1.6457 -0.032 30-year bond 94-240/256 1.8465 -0.027 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 6.75 0.25 spread U.S. 3-year dollar swap 6.00 0.25 spread U.S. 5-year dollar swap 7.25 0.25 spread U.S. 10-year dollar swap 0.25 -0.25 spread U.S. 30-year dollar swap -25.50 -0.50 spread (Editing by Leslie Adler)