Morning Recap: UST yields rose y'day after Buffet expressed interest in some of the businesses of the monoline insurers, (municipals, specifically)- but USTs rallied later in the session on rumours of bank portfolio selling assets at 20 cents on the dollar, on top of talk another failed ARS auction. In Tokyo, USTs reopened higher with the street going long and there's been talk of decent Japanese RM buying of USTs and European Govies, esp in 7yr sector. Bunds opened higher in line with USTs, but soon gave way to a general supply concession ahead of the Bund tap. Schatz continue to outperform on credit concerns. Sweden surprise hike had their curve flatten by 16bp which in turn led to hedges hitting Schatz against Bunds. Periphs, generally, have outperformed today despite supply. France also outperformed with 15yr holding well- France OATi 15yr still to price today. We've heard decent demand for new OATi's by ALM desks' at the French banks. Book closed y'day at Eur 6.4 bn for pricing this AM which should keep Bunds in check. In the short-end of EUR, March Bors have been subject to Libor punters' keeping the contract offered as a result of the US student loan stories, expectation's of libor moving up and EONIA/FRA spreads moving out. The Bund auction went ok, with a b/c ratio of 1.7, premium vs stop was 5 cents. Bunds remain soggy ahead of French 15yr linker deal this AM. All eyes on US retail sales: look for retail sales to fall 0.3% in Jan, following a 0.4% drop in Dec- The bulk of the weakness should come from a decline in auto sales. Close to these prints should aid a bid in the front-end but nothing really sustainable. All eyes remain on monolines/Bid-Lists/Equities