At 2:00 p.m. ET, the Federal Reserve will publish its latest Beige Book, a collection of economic anecdotes from across the country.
Generally, market-watchers don’t take this report too seriously.
However, this time around, the report may offer some clues as to what will happen when the Fed convenes for its Federal Open Market Committee meeting on September 17 and 18.
Currently, economists expect the Fed to announce the tapering of its monthly purchases of $US85 billion worth of bonds at the conclusion of the upcoming meeting.
Of course, that’s all dependent on how the Fed views the health of the economy.
Here’s a preview from Credit Suisse’s Neal Soss:
The Fed’s next Beige Book, summarizing Fed District Bank conversations with business contacts, is being prepared for use at the September 17-18 FOMC meeting. The information in the report probably was collected between the second week of July and late August, a period that included a continued rise in interest rates and net withdrawals from bond funds.
We expect next week’s Beige Book to describe continued “modest-to-moderate” growth in the US. This language was used in the crucial lead sentence of the July 17 and June 5 reports. If the word “modest” is dropped, that would be an upgrade; eliminating the term “moderate” would be a downgrade.
We will be looking for any indications that the tighter financial conditions seen since late May are hurting business sentiment. Such anecdotes may prompt some push-back from the Fed. In the case of the September 17-18 meeting, pushing back may entail sugar- coating any QE3 tapering by extending the forward guidance on the fed funds rate target.
We’ll cover the release live at BusinessInsider.com.