- European government bonds closed lower in yesterday's session after the ECB's Trichet signaled that the ECB will raise interest rates to 3.75% in March. - As expected the ECB left interest rates unchanged at 3.50%. - In the post announcment press conference the ECB's Trichet said that strong vigilance is required. Trichet followed reiterating that the ECB's policy is still accommodative, and that rates are still low. Trichet also noted that upside inflation risks remain intact. - The focus in today's session will fall upon the German wholesale price index, which is due out at 2:00 ET. The wholesale price index is expected to fall in January. - Over in the UK gilts closed higher after the Bank of England left interest rates unchanged at 5.25% as expected. - Traders are now awaiting the BOE minutes from the 2/8 meeting. The minutes will be released on 2/21. - The focus in today's session will fall upon the UK trade balance which is due out at 4:30 ET. The trade balance deficit is seen narrowing in December when compared to November's numbers.