Beige Book: Little New, Little Reaction

The initial read of the Fed's Beige Book is ho-hum. Most districts report slower pace of economic contraction. Labor markets remain soft. Modest manufacturing recovery in 6-12 months. There were few signs of positive growth, but we would anticipate that by the end of Q3 there will be positive growth signs. The Beige Book was compiled by the Boston Fed. The next FOMC meeting is August 12th. No new initiatives are currently expected then.

The dollar remains well bid today. Our earlier idea that the North American session could see a weaker dollar proved for naught. The greenback has been resilient in the face of a disappointing 5 year auction. The weakness of the stock market and profit-taking in commodities and EM, and what many observers call "risk averseness" appears to be the main driver today.