U.S. govt bonds close higher on PG&E bankruptcy, weak employment data

NEW YORK (AFX) - U.S. government bond prices closed higher after a weaker-than expected March employment report and the bankruptcy filing by Pacific Gas & Electric Co strongly suggested a recessionary U.S. economy, dealers said.	    At 4.00 pm, the 5-3/8 pct 30-year bond was up 33/32 at 98-25/32 yielding 5.456 pct, the 5 pct 10-year note was up 21/32 at 100-28/32 yielding 4.882 pct, the 4-1/4 pct 2-year note up 7/32 at 100-11/32 yielding 4.050.    The June bond future contract up 1-1/32 at 104-21/32.    Dealers said the numbers were "very good for bonds," and bid higher despite already rich valuations.    Merrill Lynch's Marty Mauro said that the bankruptcy filing of California's largest utility, PG&E, saw investors rush into long-term bonds.    Nonfarm payroll employment fell 86,000 in March from February, the largest decline in nonfarm payrolls since November 1991.    The unemployment rate was 4.3 pct in March, up from 4.2 pct in February. This is the highest unemployment rate since July 1999.    Although the decline in nonfarm payrolls was unexpected, the rise in the unemployment rate was in line with forecasts.     A 0.4 pct rise in average hourly earnings and the fall in non-farm payrolls, however, now has investors worried about inflation.    Additionally, the weak economic data raises hope that the Fed will make an inter-meeting interest rate cut, dealers noted.    AG Edwards debt strategist Michael Maurer said the employment report "shows there is further weakness in the economy," thus making today's surge in Treasuries sustainable, at least in the short-term.    Mauro said he expects to see a further treasury strengthening in the next couple of months until the next FOMC meeting in mid May.    The Fed Funds rate was at 4-15/16 pct.		

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