NEW YORK, Nov 26 (Reuters) - U.S. Treasury debt yields on Friday posted their sharpest drop since the pandemic began as investors rushed toward safe-haven assets following the emergence of a new coronavirus variant in South Africa. read more The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 14.2 basis points at 0.502, the sharpest drop since March 2020. The yield on 10-year Treasury notes was down 16.8 basis points to 1.477%. It last traded at these levels in early November. The yield on the 30-year Treasury bond was down 14.2 basis points to 1.829%. "The economic recovery has been quite impressive and the one thing that could knock it over completely would be a more dangerous variant. Time will tell how worried we should be, but investors are selling in front of potential bad news," said Ryan Detrick, chief market strategist for LPL Financial. Yields had been rising throughout the week following President Joe Biden"s announcement Monday that he would renominate Jerome Powell to a second term at the helm of the Federal Reserve. That, along with signs of strength in the U.S. economy, had pressed investors into taking bets the Fed would move more aggressively to fight inflation. European stocks suffered their worst day in 17 months as countries in Europe tightened travel controls in hopes of containing the new variant. read more In the United States, the blue-chip Dow Jones Industrial Average fell 2.5%, while the Russell 2000 index of smaller companies tumbled more than 3.6%. read more The yield curve steepened, with spreads between five- and 30-year Treasuries rising back to the levels before the news Monday of Powell"s reappointment. Futures on the U.S. federal funds rate, which track short-term interest rate expectations, jumped as investors rethought bets the Fed would move quickly to hike rates to quell inflation. According to CME"s FedWatch tool, money market traders were pricing in a 58.5% chance of at least a 0.25% hike by the Federal Open Market Committee"s June meeting, down from an 82.1% chance Wednesday before the U.S. Thanksgiving holiday, and a 67% chance a week ago before Biden renominated Powell. The 10-year TIPS breakeven rate was last at 2.553%. November 26 Friday 2:30PM New York / 1930 GMT