NEW YORK, Nov 19 (Reuters) - Long-dated U.S. Treasury yields tumbled on Friday as concerns about new lockdowns related to the spread of COVID-19 in Europe increased demand for safe-haven bonds, though the move was likely exaggerated by low liquidity. Two-year yields jumped, meanwhile, after Federal Reserve Vice Chair Richard Clarida took a hawkish tone in a speech and acknowledged that there is an upside risk to inflation.Germany"s health minister said a lockdown including vaccinated people could not be ruled out. Austria said it will reimpose a full lockdown next week and require its entire population to be vaccinated as of February. read more The European response has raised some concerns that new lockdowns could also happen in the United States if there is a dramatic rise in cases, which would hurt the economy. “Even though Europe has been more aggressive than the U.S. in terms of heavy-handed government responses to COVID, there is always chatter about how we could see the same sort of stuff happening over here if cases were to increase significantly,” said Tom Simons, a money market economist at Jefferies in New York, though he added that “I don’t think those fears are necessarily justified.” The size of the reaction, which sent 10-year yields down as much as nine basis points, also indicates impaired market liquidity that analysts say is in part because hedge funds burned by volatile moves in October and November have pulled back from the market. read more “The hedge fund community is not in there in the same way that they normally are and that could be creating a little more of an illiquid market and a little bit more rate movement than normally we would otherwise see,” said Simons. Benchmark 10-year notes last yielded 1.538%, down five basis points on the day, after dropping as low as 1.515%. the lowest since Nov. 10. Many investors were caught offside in October as a rapid rise in inflation led traders to reprice for the possibility that the Fed may need to raise rates as soon as mid-2022 to stem price pressures. Two-year yields also jumped on Friday after Clarida said that it "may very well be appropriate" to discuss speeding up the Fed"s asset purchase wind-down when it next meets in December. read more Traders are now pricing in a 67% chance of a rate hike in June 2022, compared with a 54% chance earlier Friday, according to the CME Group"s FedWatch tool. The two-year yields were last at 0.505%, after falling to 0.446% earlier in the day. Fed Governor Christopher Waller also said on Friday that the U.S. central bank should stand ready to increase the pace of its reduction in bond purchases and raise interest rates from their near zero level sooner than it currently expects due to persistently high inflation and the strength of job gains. read more Liquidity is expected to decline further next week before the market closes on Thursday for Thanksgiving, which could result in even choppier market moves. The Treasury next week will sell $176 billion in new coupon-bearing supply, including $58 billion in two-year notes and $59 billion in five-year notes on Monday, as well as $59 billion in seven-year notes on Tuesday. November 19 Friday 3:00PM New York / 2000 GMT