Importance of the Fed’s Beige Book for fixed income investors (Part 9 of 11)
The Beige Book is one of the primary data sources used by the Fed to determine monetary policy at Federal Open Market Committee (or FOMC) meetings. The Beige Book has been a key determinant of the direction of the Fed funds rate or the interest rate at which depository institutions trade funds amongst each other. These funds are balances held at the U.S. Federal Reserve. Since December 2008, the U.S. Federal Reserve’s target for the federal funds rate has been between 0%-0.25%.
While the Fed funds rate is unlikely to change in the next FOMC meeting, markets will be eagerly watching signals from the Beige Book release that are likely to impact the Fed’s tapering of asset purchases. This would impact bond ETFs like BND, TLT, AGG, TLH, and IEF.
Browse this series on Market Realist:
- Part 1 - Importance of the Fed’s Beige Book for fixed income investors
- Part 2 - The must-know indicators covered in the Fed’s Beige Book
- Part 3 - Non-financial services: The demand for tech services strengthens
- Budget, Tax & Economy
- Federal Open Market Committee
- Fed funds rate