Friday, October 29, 2010

Fed's Beige Book indicates upcoming bond industry push

The Federal Reserve publishes the Beige Book eight times a year to offer an assessment of the state of the economy in different regions around the U.S.. Data within the Beige Book is collected from all the Federal Reserve financial institution districts. There wasn’t much to get anxious about in the Beige Book that hit the streets Thurs, but at least the flagging economic climate appears to have leveled off.

Guesses regarding the Fed confirmed with Beige Book

Before the Fed governors meeting, the latest Beige Book came out. November 2-3 will be when this meeting happens. Most analysts, economists and investors expect the Fed to unveil new and unconventional approaches to stimulate the economy. The Washington Post accounts that such a stimulus is desperately needed, according to Beige Book information. The October Beige Book accounts on a weak job industry, 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 areas

The patch of blue within the terrible forecast is what Gail Marks Jarvis at the Chicago Tribune discusses rather than looking at the grim outlook from the Fed’s Beige Book. Last spring, the Beige Book had a different opinion. It talked regarding the “widespread signs of declaration” within the economy. The Oct Beige Book info was not all negative. Some improvements were shown too. Jarvis explains that some of the good news involves new factory orders in numerous industries, a rise in consumer spending and manufacturing expanding.

The bond market changing with the Beige Book

Overall, the Fed’s Beige Book said seven of the Fed’s 12 regions showed reasonable economic improvement. The rest of them either went down a ton or just being questioned. According to ABC News, traders interpret the Beige Book in their own way. They see it as a sign the bond market will start to have the Fed in it soon. This has caused more investors to buy bonds. They want higher treasury yield out of it. After the November meeting, the Fed is expected to start purchasing more Treasury’s which would make stock yields go down a bit. Spending and investment can be stimulated if the long term interest rates are pushed even lower which is the plan of the Fed.

Details from

Washington Post

washingtonpost.com/wp-dyn/content/article/2010/10/20/AR2010102005512.html?sub=AR

Chicago Tribune

newsblogs.chicagotribune.com/marksjarvis_on_money/2010/10/fed-reports-glimmers-of-sunshine-in-economy.html

ABC News

abcnews.go.com/Business/wireStory?id=11929195



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