- European government bonds traded sharply lower on Friday following a hawkish post-meeting speech given by the ECB's Trichet on Thursday, as well as stronger than expected industrial production data in Itlay and France. - With no scheduled economic releases, speakers, or new supply, and no data scheduled in the US, the focus in today's session will fall upon technical trading. - The ECB's Weber said this weekend that the underlying growth trend in the Euro-13 remains intact, noting that oil prices remain volatile. - The ECB's Draghi said that inflation risks may grow if they are not confronted in the coming months. Draghi indicated that, in coming months, further interest rate hikes may be necessary in order to keep inflation from breaching the 2.0% level. - Gilts also traded sharply lower in the UK on Friday on little news. Gilts gave back some of Thursday's post decision gains in a session light on economic data. - With no scheduled speakers, and no new supply, the focus in today's session will fall upon PPI input and output data, due out at 4:30 ET. Input and output numbers are seen falling compared to December's figures, while output core is seen rising m/m, and remaining unchanged y/y.