US: Focus on Beige Book release today - Nomura

Ahead of the 25-26 July FOMC meeting, the Federal Reserve Board will release the Beige Book, a collection of anecdotal information from business leaders within each of the 12 Federal Reserve districts and will be keenly watched by investors as this information complements other data used by the Fed to gauge activity in each of the districts.

Key Quotes

“Recent trends in the Beige Book include most districts reporting continued labor market shortages, likely reflecting increased labor market tightness. Price information has been mixed recently with some districts reporting manufacturers facing higher commodity prices while others note falling prices for “certain final goods, including groceries, apparel, and autos.” Given weaker-than-expected CPI reports over the past few months, any further information on regional price pressures will garner some attention.”

“Additionally, comments from the eighth district (St. Louis) included some concern on the part of automakers who noted that slowing auto sales may persist into Q3 2017. Moreover, auto dealers in Cleveland’s district noted some concern regarding “higherthan-normal inventories and credit tightening for subprime buyers.” With auto sales for the month of June coming in below expectations for a sixth consecutive month, further evidence of struggling dealerships may come up in the Beige Book. How regional business sentiment has evolved since the last Beige Book prepared for the June FOMC meeting will also be of some interest.”

“In particular, as expectations for future policy from the Trump administration dampen, business sentiment may recede further from elevated post-election levels. However, most districts in May reported modest economic expansion, indicating that the underlying strength of the recovery remains firm.”