European FI is rallying on the back....>

BOND SUMMARY: European FI is rallying on the back of tensions post-U.S. killing

an Iranian general in Iraq, with German curve bull flattening.

- Italian BTPs have also popped, 10-Yr cash yields falling nearly 6bps on the

open, though spread narrowing vs Bunds has largely retraced.

- French Dec CPI up 0.5% M/M, vs 0.3% consensus.

- This morning sees the rest of German regional CPI (Saxony out earlier came in

at 0.6% M/M vs -0.8% prior), with the German national number out this afternoon.

- UK construction PMI/consumer credit, and EZ money supply also of some interest

this morning. Latest levels:

* Mar Bund futures (RX) up 58 ticks at 171.84 (L: 171.1 / H: 171.95)

* Germany: The 2-Yr yield is down 1.4bps at -0.617%, 5-Yr is down 3.3bps at

-0.542%, 10-Yr is down 4.3bps at -0.266%, and 30-Yr is down 4.2bps at 0.265%.

* Mar Gilt futures (G) up 34 ticks at 132.04 (L: 131.97 / H: 132.14)

* Mar BTP futures (IK) up 75 ticks at 143.14 (L: 142.72 / H: 143.24)

* Italy / German 10-Yr spread 1.6bps tighter at 162bps

* Mar OAT futures (OA) up 52 ticks at 164 (L: 163.8 / H: 164.09)