Bridgeton - Global Investor Service

June 13, 2007 : The Federal Reserve released its latest Beige Book report on the economy on Wednesday, and the information inside was rather calming and supportive of the US economic condition.

The Fed painted a rosy picture that showed steady, moderate growth with little worry about inflation. Or at least, less worry about inflation than other Fed comments have suggested. Contacts from across the country are used to compile the report, and indications from all twelve of the Fed’s regions were positive. The Fed particularly noted increased consumer spending and retails sales during the April-May period covered in the Book. While parts of the real estate sector remained weak, commercial real estate was noted to have seen improvement.

The lack of inflationary pressures was key, as that is seen as one obstacle standing in the way of the US economy at this point. Food and energy prices remain an obvious concern, but the Fed summarized that “reports generally did not indicate an increase in overall price pressures”.

Stock index futures were much stronger as a result of the release of the report. The September S&P 500 settled 22.70 points higher at 1530.20 and the September Nasdaq ended up 19.25 points at 1937.25.

Agricultural traders are watching weather reports from around the world as both Wheat and Corn are extending recent gains. Wheat futures again led the way thanks in part to drought-like conditions in most of Asia. Russian crops are in danger and we have already discussed conditions in the Ukraine following that country’s recent decision to limit exports in order to concentrate on domestic reserves. July wheat traded limit up for part of the day Wednesday before falling back to settle 24 ½ cents higher at $5.89 ½. Drier weather forecasts in the US were supportive of corn futures, although the gains were much more mellow. July corn settled at $4.04 ½; a gain of 11 cents on the day.