- European government bonds closed higher in the US after the release of greater than expected CPI data in the US. - The ECB's Papademos reiterated overnight that interest rates remain low and the liquitiy is ample. Papademos also reiterated that the ECB will act pre-emtively to combat inflation, pointing out that oil prices, wages, and M3 all pose upside inflation risks. - In a session packed with second tier economic data, the focus is likely to fall upon final Q4 GDP in Germany as traders will be looking for any revisions. Additional focus will fall upon Euro-Zone industrial new orders. The data is due out at 2:00 ET and 6:00 ET respectively. - Over in the UK gilts closed higher after the release of the Bank of England's minutes, which were less hawkish than some had intially anticipated. - The BOE voted 7-2 to keep interest rates unchanged at 5.25% in February with Beasley and Sentance representing the dissenting members. The BOE minority said that they put particular weight on upside inflation risks, while the Majority felt that February rate hike would lead to 'excessive tightening". Additionally, the Majority said that limited spare capacity will lead to tighter labor markets. - The BOE's bean said overnight that CPI is likely to fall back sharply this year, even well below 2% but this does not mean that the MPC can relax. Bean noted that the rise in sterling will make life harder for exporters. Bean also said that some increase in wage growth is in the cards, and finished by noting that it is hard to know where interest rates will go next. - The focus in today's session will be preliminary Q4 total business investment, which is due out at 4:30 ET. Additional focus will fall upon gilt auction results as the DMO is set to sell £2.75B in 4.0% 2016 bonds. Results are expected slightly after 5:30 ET. - In the US yesterday, the minutes from the FED's January 31 policy setting meeting were released. The FED did not drop its tightening bias. All FOMC members agreed that the statement should say that additional firming was possible. Members agreed change in rates not warranted at this time. Members also agreed to stress that inflation risks remained.