Importance of the Fed’s Beige Book for fixed income investors (Part 1 of 11)
What is the Fed’s Beige Book and why is it relevant for fixed income investors?
The U.S. Fed’s Beige Book is prepared eight times a year and usually published a couple of weeks ahead of the U.S. Federal Reserve’s Federal Open Market Committee (or FOMC) meeting. The Beige Book contains a summary of economic conditions for each of the 12 reporting districts by sector. This is one of the primary data sources used by the Fed for determining monetary policy at the next FOMC meeting. The release of the Beige Book ahead of the FOMC meeting gives investors an opportunity to assess the future course of the Fed’s policy.
Who prepares the Beige Book?
The Beige Book is prepared by the 12 Federal Reserve Banks. The Beige Book cycle commences six weeks prior to the next FOMC meeting. During the cycle, each Federal Reserve Bank summarizes economic conditions in its district by gathering anecdotal information on current market conditions through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. An overview of all 12 reporting districts is prepared by a designated Federal Reserve Bank on a rotating basis. For investors looking to invest in ETFs such as BND, TLT, AGG, TLH, and IEF, learning about the Fed’s Beige Book is a must.
Browse this series on Market Realist: