The Beige Book stated the economy continued to expand across most of the country amid broad based gains in hiring and rising consumer spending. The Fed found “modest” or “moderate” growth in eight of its 12 districts. Four of the twelve districts reported economic activity increasing “slightly” or “slowing slightly” because of weather or labor induced slow down.
Payrolls “remained stable or expanded” and wage pressures “remained moderate” and were largely concentrated to workers in “skilled occupations.” Inflation was “flat” or “rising slightly.”
Generally speaking the Beige Book closely mirrors last week’s congressional testimony by FRB Chair Yellen.
Markets had little reaction to the Beige Book with perhaps all eying Friday’s all inclusive labor report.
Speaking of jobs, the ADP Private Sector Employment Report was softer than expected however there was a considerable upward revision of the prior month’s data.
Commenting about yesterday’s activity, the Dow stumbled for the second consecutive day as all are searching for a catalyst. The timing of any change in monetary policy is still murky however all know the Fed is waiting until inflation is at 2% or higher for “a period” before rising rates.
Oil advanced about 2.5% yesterday inventories grew less than expected. Treasuries were essentially unchanged and the utilities were off about 0.5%. Since their 1/28 peak, utilities are down about 11%. Can you imagine the headline if the Industrials were off 11% or about 2000 points in about a month?
As noted yesterday, I think this bifurcation between two major benchmarks is significant as such is an extremely rare event.
Last night the foreign markets were up. London was up 0.47%, Paris up 0.99% and Frankfurt up 0.78%. Japan was up 0.26% and Hang Sang down 1.11%.
The Dow should open quietly higher awaiting the details of tomorrow’s jobs report. The ECB left interest rates unchanged at negative 0.25%. No details about the ECB’s QE program has yet to be released, details that will be released later today. The 10-year is off 5/32 to yield 2.14%.