This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The Fed’s Beige Book was released this evening, a region-by-region review of the US economy, and the report suggests conditions continue to improve, albeit at a constrained pace. The pace of improvement in business activity was described as being ‘modest to moderate’, which is no different to the previous quarter, while most of the 12 Federal regions reported a rise in consumer spending, manufacturing and demand for services since the last report.
Hiring in most industries was either steady or improving compared to the prior quarter, and inflation appears to be under control. ‘Upward price pressures remained subdued, and prices increased slightly during the reporting period. Wage pressures continued to be modest overall,’ according to the report. Consumers continue to show caution in their purchases and remain highly price-sensitive, however.
I don’t think this changes the complexion a great deal in terms of the Fed’s decision making. The report suggests economic growth remains on track, which would lean toward some tapering at this month’s FOMC meeting, although that eventuality is likely at least partially priced into the stock market by now.
Tomorrow we have jobless claims and the ADP employment report, the latter of which may provide an early feel for Friday’s important non-farm payrolls.