Talking Points:

• The FOMC rate decision is scheduled for Wednesday and there is a heavy consensus of a Taper

• Banks, economists and the markets themselves have moved to price in a reduction in QE this month

• One market stands out for its lack of expected adjustment - the S&P 500 (a benchmark for risk)

Sign up for John’s email distribution list, here.

The market eagerly awaits the FOMC rate decision next week, but the event may not be as easy to trade as some may think. Significant adjustments in Treasury yields and a range of other rate-sensitive markets over the past months suggests that this significant market adjustment for the financial system may already be heavily priced in. If that is the case, volatility can be be dampened and there is even a possibility of seemingly contradictory market trends. However, there is one market that remains exceptionally exposed and unrepentant to its dependency on outside support: the S&P 500 and US equities. And, given this asset's position as an investor sentiment measure, a late but inevitable capitulation can rock the entire system.

Bring the economic calendar to your charts with the DailyFX News App.