By Gertrude Chavez-Dreyfuss NEW YORK, Jan 27 (Reuters) - U.S. Treasury yields slumped on Wednesday as nagging concerns about the surge in virus cases, the prospect of prolonged lockdowns, and challenges to vaccine rollouts weighed on the global economic outlook. The Federal Reserve is also scheduled to make its policy announcement later on Wednesday, but is not expected to shake the market. The U.S. central bank is likely to keep its ultra-accommodative policy as the economy battles the pandemic, analysts said. U.S. coronavirus deaths continued to rise to roughly 425,000, with total cases of more than 25 million. Globally, virus cases surpassed 100 million, according to a Reuters tally. Yields across the curve, except those on U.S. five-year notes, moved in tandem, dropping to three-week lows. That flattened the yield curve, an indicator of risk appetite, with the spread between two-year and 10-year notes hitting 88.40 basis points, the narrowest gap in three weeks. "There are concerns about the labor market as U.S. payrolls are coming up soon," said Stan Shipley, fixed income strategist, at Evercore ISI in New York. "There are concerns about what's going on in Europe. Their economies are suffering again and the odds are rising that they may have a double-dip recession. In mid-morning trading, the U.S. benchmark 10-year yield fell to 1.002%, from 1.04% late on Tuesday. It earlier fell to 1.001%, its lowest since Jan. 6. U.S. 30-year yields dropped to 1.765% from Tuesday's 1.802%, after earlier sliding to a three-week low of 1.761%. U.S. 20-year bond yields also sank to a three-week trough and were last at 1.574%. At the front end of the curve, U.S. two-year yields were down at 0.119%, tumbling to a three-week low of 0.117% earlier in the session. That said, market participants said part of the decline in yield could be attributed to seasonal factors. Evercore's Shipley pointed out yields historically tend to fall in the months of February, March, May, August, and December. "You get a lot of bonus payments and consumers get a lot of options," Shipley said. "So they put their money in their checking accounts and whatever in late January, and that filters into short-term Treasury purchases." The break-even inflation rate on 10-year TIPS, meanwhile, which measures expected annual inflation over the next decade, dropped below 2% for the first time since late December. It was last at 1.994%, down from Tuesday's 2.004%. Analysts have been touting for weeks that breakeven rates are stretched in terms of valuation and are due for a pullback. Looking ahead to the Fed, John Herrmann, rates strategist at MUFG Securities Americas, believes it may be another six months before Fed Chairman Jerome Powell begins to shift his tune and starts expressing "greater confidence in the outlook." January 27 Wednesday 9:48AM New York / 1448 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0775 0.0786 0.000 Six-month bills 0.0825 0.0837 0.000 Two-year note 100-4/256 0.1172 -0.008 Three-year note 99-222/256 0.1699 -0.013 Five-year note 99-222/256 0.4019 -0.025 Seven-year note 99-128/256 0.6991 -0.028 10-year note 98-200/256 1.0059 -0.034 20-year bond 96-164/256 1.5731 -0.034 30-year bond 96-180/256 1.7678 -0.034 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.50 0.25 spread U.S. 3-year dollar swap 8.50 0.75 spread U.S. 5-year dollar swap 9.25 -0.50 spread U.S. 10-year dollar swap 3.50 0.25 spread U.S. 30-year dollar swap -25.00 -0.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Kirsten Donovan)