- European government bonds closed higher yesterday on increased investment as markets faced greater volatility. Bonds were lifted by the lower than expected ISM Non-Manufacturing data in the US. - In focus today is the release of Euro-Zone January retail sales data, which is seen rising to 0.4% from 0.3% in December, along with preliminary Q4 GDP data. All data is due out at 5:00 ET. - Gilts closed higher in the UK as well, but closed off of session highs. - An IMF representative said yesterday afternoon that, depending on wages, further BOE interest rate hikes may be necessary, and that the Sterling FX rate may slightly exceed equilibrium. The IMF forecasted CPI at 2.3% in 2007, below its previous forecast of 2.4%, and GDP growth at 2.9%, up from the previous forecast of 2.7%. - The February BRC Same-Store retail sales were released overnight, and rose by 3.3%, the most since July of 2006. - The UK DMO is set to sell £2.25B in 4.25% 2027 bonds. Results are due out just after 5:30 ET.