Slow Graphic actions when Line labelling is on

I have an SDE (Geometry) 10.2 on SQL Server 2012 - ArcMap 10.1. I place a line layer on the map, label the lines. Draw a rectangle on the map. Then try to move or rotate the rectangle. The performance is terrible.

This problem doesn't occur when I have a polygon or point layer labeled on the map. Only line layers. If I turn off the labeling on the lines it is fine.

The SQL Server Activity Monitor goes nuts while I am trying to move the rectangle.

Anyone seen this and have a cure for it?

Thanks