The focus this week will be directed at President Obama’s State of the Union Address on Tuesday, the first FOMC meeting of 2011 on Wednesday, and the first release of fourth quarter GDP results on Friday.

Reports this weekend were that President Obama’s administration would most likely delay release of its proposal to restructure Fannie Mae and Freddie Mac, as required by the Dodd-Frank law.  The law requires the Treasury to release its recommendations by January 31, but expectations are that it won’t be until mid-February before that occurs, this according to the Wall Street Journal.  With the housing market still fragile, it is most likely that they will try to push this further into the future.

Regarding the FOMC release, we are interested to see how the statement changes, if at all, as a result of the four new voters.  News over the weekend was fairly light with a focus this morning on global inflation concerns.  The rumor is that the Fed will be adopting a more formal inflation target of 2%.  This is a two day meeting starting tomorrow, with the final statement release coming in at 1:15pm CST on Wednesday.  We are expecting very little change to the statement and the FOMC to continue with QE2 purchases.

We will also get our first estimate on GDP for the fourth quarter on Friday.  Looks to be a good quarter for growth given the uptrend in exports and the surge higher in personal consumption.  The consensus is calling for 3.5%.  This is a busy week for economic data, along with the Treasury auctioning 2-year, 5-year, and 7-year notes starting tomorrow.

Treasuries managed to push higher last Friday without making a substantial move to the upside.  The lower trend line that has restricted weakness since December 16th, now at 119-225, continued to limit any downside into this morning’s trade.  Bears need a break below 119-225(above 3.47% yield) to confirm further downside (higher rates) is likely.  A close above 120-12(below 3.38% yield) would suggest we have further upside potential for better rates and pricing.  Today should be a fairly quiet trading day with the market gearing up for tomorrow’s start to a busy week.