Welcome to the town of Saronia and one of the first things you'll notice are some of the townspeople have exclamation points over their heads. Talk to them and then head to the area in the southeast (Shantytown). Before talking to the NPC here, make yourself a Jiant and snag the chest that's on top of the one building for Occult Fan, Issue 2. Talk to the NPC and you'll be taken back to the central area, where your next goal is to go to the thane's house. Head to the area to initiate a cutscene, with you being brought to a boss battle.
BOSS - Federation Guard
There's not much you have to worry about with this boss in terms of stats, as he has no resistances and 3840 HP, but note that he's resistant to all ailments, so don't bother with them. However, the boss knows one very annoying move called Tower Breaker, which can hit for high damage and also one-hit destroy your stack. This is especially troublesome, since when your stack is toppled, the characters become dizzy for a few moments, so the boss might get a turn in before you can restack.
Other than his physical attack, another move he knows is called Venom Lance. As its name suggests, this one has a chance of poisoning you. You should have a few Antidotes on you by now to cure this should it stick. Overall, this boss is simple and the only trouble is Tower Breaker. If you can quickly adapt to that and heal up any characters in trouble, you should have no problems defeating the boss.
After the boss has been defeated, watch the following cutscene that plays out, where you learn some things about the Federation-controlled towns. In the end, you receive the Magic Monocles item, as well as some new Intervention Quests and a new Champion Medal in the Tearoom.