U.S. govt bonds close higher in New York on soft economic data

NEW YORK (AFX) - U.S government bond prices closed higher in New York trade, but off their highs, after the University of Michigan consumer confidence index fell marginally and the Chicago Purchasing Management Index dropped sharply, sparking worries about next week's NAPM data and the economy in general, dealers said.	    At 3.45 pm, the 5-3/8 pct 30-year bond was up 20/32 at 98-25/32 yielding 5.453 pct, the 5 pct 10-year bond rose 21/32 to 100-21/32 yielding 4.911 pct and the 5 pct 2-year note was up 6/32 100-4/32 yielding 4.167 pct.	    The June bond future contract was down 13/32 at 104-10/32.	    Dealers said the steep drop in the Chicago Purchasing Index might portend badly for Monday's National Association of Purchasing Managers data.	    Lehman Brothers' Drew Matus said the Chicago data was in contrast with monthly auto sales which are expected to remain buoyant.	    "It seems as if the consumer is saying the economy is pretty bad, but they are still willing to go out and buy cars," he added. 	    The Chicago Purchasing Management Association said its index of regional business activity fell to 35.0 in March from 43.2 in February.	    Matus said, "the surprising weakness of the number has also has increased the Fed potential for an inter-meeting interest rate cut."	    Investors have the Fed fund future pricing in a 40 pct chance of a 25 basis pts cut, he added.	    The consumer sentiment index fell to 91.5 in the final March report from 91.8 in the preliminary report. The fall was smaller than expected.	    The Fed fund rate was at 5-1/2.

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