U.S. Treasury prices soared on Thursday and benchmark 10-year note yields fell below 2 percent for the first time as global economic fears sent investors scrambling to safe haven government debt.

U.S. bond buying intensified after data showed that factory activity in the Mid-Atlantic region plummeted in August while sales of U.S. existing homes unexpectedly dropped in July.

The data added to concerns that the U.S. economy will head back into recession at the same time as the country's rising debt load and record deficit leaves the government and the Federal Reserve with fewer options to stimulate the economy.

It looks pretty bad across the board, said Gus Faucher, director of macroeconomics at Moody's Analytics in West Chester, Pennsylvania.

The data sparked a frenzy of buying that sent benchmark 10-year note yields as low as 1.97 percent, smashing through the previous low yield of 2.038 percent.

Thirty-year bond yields also plunged as low as 3.34 percent, the lowest since January 2009.

Economists and policy makers have been increasingly reducing growth estimates on weakening data and persistently high unemployment, leading investors to flee riskier assets.

These fears have overcome concern over rising inflation even as data on Thursday showed a higher-than-expected increase in U.S. consumer prices in July.

I think the realization is that there's economic weakness perhaps over the whole globe, said David Coard, head of fixed income trading at The Williams Capital Group in New York.

The evidence that the market is trading off the weakness is that they seem to be overlooking a higher-than-expected headline CPI number, he added.

The Federal Reserve's statement last week that it will keep interest rates on hold for at least another two years has been viewed by many as a sign the central bank is struggling to turn around the stubbornly weak U.S. economy.

The policy also sent shorter-dated debt yields to new, paltry lows, leading many buyers to reach out to longer maturities in a bid to generate returns.

European policymakers have also thus far failed to convince investors that they will be able to stem contagion from the debt problems of peripheral nations, which threaten to further derail economic improvement across the region.

Benchmark 10-year Treasuries were last up 1-8/32 in price to yield 2.04 percent, down from 2.17 percent late on Wednesday.

(Additional reporting by Richard Leong, Editing by Chizu Nomiyama)