FOMC Decision Takes Center Stage

Today, the FOMC wraps up a two-day meeting and will issue its policy statement at 2PM ET. While there has been growing chatter that the Fed will step-up the pace of QE tapering from $10 billion to $15 billion, most still expect them to stick to the status quo.

With the Fed currently adding to its asset holdings at a pace of $45 billion per month (down from a high of $85 billion), cutting at the current rate of $10 billion per meeting puts the Fed on pace to end QE by the end of October. However, if they were to step up the pace to reduce asset purchases by $15 billion then QE could end two months earlier, or at the end of August.

With the ECB taking the QE baton, the Fed may see now as an opportune time to step-up the pace of tapering. That said with the recovery still not in full swing they can also easily make the case to stay on course with the current pace of asset purchase reductions.

In addition to the tapering decision, Fed Chairman Janet Yellen will also hold a 2: 30PM press conference. Investors will be focusing on any guidance on when QE will end, the Fed's exit strategy, and guidance on when interest rate hikes could be considered. The Fed's Summary of Economic Projections is also expected to be released before the press conference.

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