What to look for in the Beige Book
The Beige Book will be released at 2 pm ET (1900 GMT) and while the economic outlook is likely to improve the most important question may be inflation.
The report was prepared around Nov 25, when WTI prices were about $10 higher. Other commodities have fallen as well.
In the Oct 15 Beige Book, the economy was described as “modest to moderate” and that is likely to be upgraded to “moderate”, which is the language the FOMC used in the Oct 29 statement. The latest Fed statement also included a more-upbeat assessment for employment that’s likely to appear in the Beige Book.
None of that will be a surprise. Instead, the market is more likely to focus on the Fed’s view of wage inflation and overall inflation. Numbers released on Wednesdays showed lackluster wage growth and there are no signs of broader US inflation.
In October ‘several’ districts reported upward wage pressures and that kind of commentary may guide the Fed in the months ahead.
Overall, this report is unlikely to be a major market mover but the US dollar hasn’t needed much of a reason to rally lately.
