The Beige Book, a compilation of anecdotal reports on the economy that the Fed will consider for its upcoming November 7th meeting, was released today. In it, fewer districts were characterized as contracting and, combined with my work on the GDP of each Fed district, suggests that 19% of the country is in recession from 33% in the last report and 59% in last November’s report (see chart below and more detail in attachment.) This Beige Book improved from the last one.

Raphael Bostic, president of the Atlanta Fed (second biggest by GDP) and representing one of the only three districts contracting (albeit “slightly”), is advocating for the Fed to take a pause in November or December, which shows how little the contraction in Atlanta must be. This, combined with continued good economic data (retail sales last week), the fact that the 2-year is still 30 basis points below where it was before the “week of fear” in late July/early August (stock market plunge, Fed Pivot #2, and weak jobs report), and that the September CPI report wasn’t as benign as thought, tells me the 2-year yield has further to rise. There are 41 basis points of lowering priced into the 2-year over the next two meetings, which could become 25 basis points if Raphael Bostic and/or the data convinces the committee of his point-of-view. This would likely bring the 2-year up into the 4.20%s – 4.30%s.