Treasury Market Preview by Trade the News Staff - On the U.S. calendar today are the releases of the Trade Balance for Dec. at 8:30 a.m. and the IBD/TIPP Economic Optimism Index for Feb. at 10:00 a.m. The trade balance deficit is seen rising to $59.7B from $58.2B. No Fed speak is scheduled for today. Fed Chairman, Bernanke, gives his semi-annual testimony to the Senate tomorrow. In pre-market releases, the NFIB small business optimism index rose nearly to 2 ½ points in Jan. to 98.9. The ICSC-UBS weekly chain store index fell 0.8% in the latest week. . - Regarding the trade balance data, analysts say that the trade balance deficit may have narrowed in Dec. because of the weakness in last week's wholesale inventories report (-0.5% v +0.5%e), which is often associated with softness in imports. - Yesterday an agreement was reached in the six party nuclear talks with North Korea, in which the North will receive energy, food and other aid for taking steps towards dismantling its nuclear facilities. Additionally, the U.S. will begin bilateral talks with Pyongyang to normalize relations, which will allow the North to be removed from its designation as a terror-sponsoring state and end US trade sanctions. - In new supply, Fannie Mae will sell $3.0B in 5Y notes today and $1.0B in a 10Y notes in a reopening. - In European economic news, preliminary German Q4 GDP was 0.9%, above expectations of 0.6%. The German ZEW Economic Sentiment Index rose less than expected in Feb. to 2.9 from -3.6, while the Current Assessment Index rose unexpectedly to 70.9 from 70.6. In the U.K., CPI fell more than expected by 0.8% in Jan. The data sent sterling tumbling against the dollar and euro. In the Euro-zone, Q4 GDP came in at 0.9%, above expectations of 0.6%. Industrial production in the region rose 1.0% in Dec, exceeding estimates of 0.4%. The EU Commission raised the bottom end of its Q1 GDP forecast to 0.4% from 0.3%. Finally, ECB's Garganas said earlier today that rate hikes have not hurt growth and that inflation is to decline toward the spring and summer, echoing comments by Trichet following his last ECB press conference. - At 8:15 a.m. the 30Y is flat at 110 10/32 and the 10Y future is down 1/2 tick at 106 27/32.