The expectation for Wednesday’s Fed decision is a $10 billion taper along with no changes to the statement but just because it’s expected, doesn’t mean it’s fully priced in.
The turmoil of past week along with some questionable economic data have led some to believe the Fed won’t taper next week (a less than 1% chance), only a $5 billion taper (a 5% chance) or insert additional forward guidance/calming language (about 10% depending on how dovish we’re talking).
Tally it up and a taper with no changes to guidance is only about 85% priced in. Markets will head into the decision in a jittery mood and no action could be a reason to sell stocks and put fresh pressure on emerging markets.
The obvious beneficiary of less money printing is the US dollar and look for broad strength, especially against the commodity bloc. Keep a close eye on stock markets, if they slump the yen will rally.
So long to the bubble boy