The Beige Book, published by the Federal Reserve eight times a year, is a summary of economic conditions across the country. Beige Book data is gathered by each Federal Reserve bank in its respective district. The Beige Book released Thursday had little positive to say, except that economic growth, although dismal, had stopped slowing down.
Beige Book feeds Fed speculation
The latest Beige Book precludes a much anticipated meeting of Fed governors on Nov. 2-3. Most analysts, economists and investors expect the Fed to unveil new and unconventional approaches to stimulate the economy. The Washington Post reports that such a stimulus is desperately needed, according to Beige Book data. The October Beige Book reports on a weak job market, minuscule economic growth and the threat of deflation — factors that justify pumping money into the economy with major bond purchases, something Fed governors have hinted at for months.
Beige Book bright spots
The Fed’s Beige Book tells a tired old story, but Gail Marks Jarvis at the Chicago Tribune reports on a few patches of blue in the dark overcast. She points out that last spring, the Beige Book reported on “widespread signs of deceleration” in the economy. At least the October Beige Book data shows modest improvement. Bright spots highlighted by Jarvis include a continued expansion of manufacturing, new factory orders for a lot of industries and a slight increase in consumer spending.
Beige Book and the bond market
Overall, the Fed’s Beige Book said seven of the Fed’s 12 regions showed moderate economic improvement. The rest are either inconclusive or downright moribund. ABC News reports that traders see the Beige Book as a sign the Fed will is about to dive into the bond market. In the last month traders have been buying bonds to get higher Treasury yields. They are betting that the Fed will start buying more Treasurys after its November meeting, which will force bond yields down. The Fed is betting that buying Treasurys will push long-term interest rates lower to stimulate spending and investment.
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