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Market CommentariesThe Beige Book Is Generally Well Received

The Federal Reserve's widely anticipated and closely monitored Beige Book economic summation was issued earlier this afternoon, and it provided few surprises. It also was generally well received, inducing an already strong stock market to head even higher after the report's 2:00 PM (EDT) release.

Essentially, this key compilation from the 12 regional Federal Reserve Districts intoned that the nation's economy had continued to expand across most regions from mid-February through the end of March. The improvement ranged from moderate to modest in most Districts. In all, nine of the 12 Districts described the gains in these ranges, while the improvement was slight in Cleveland. Activity was just steady in Atlanta and Kansas City.

Breaking the Beige Book down by market, we see that demand for manufactured products was mixed during the reporting period, with some weakness here ascribed to the stronger dollar, falling oil prices, and the harsh winter weather. Labor markets, meantime, remained stable or continued to improve modestly.

In other areas, nonfinancial services saw rising activity across all reporting Districts. At the same time, retail sales activity was mixed, with gains in about half the Districts, while the other half showed either mixed or slightly weaker trends. However, there was overall strength in auto sales, which was consistent with the government's report for March issued yesterday morning on retail spending across the country.    

Also, most real estate markets improved according to the Beige Book, with seven of the 12 Districts gaining ground. Four held steady, with just one market, New York, seeing some softening during this six-week span.

Taking the report in its entirety, it was a most reassuring release, and suggests that the Federal Reserve will stay the course on the monetary front, with the presumptive first increase in short-term borrowing costs (the federal funds target) being held at bay until at least this coming September.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.
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