Markets very calm ahead of Wednesday's FOMC decision

Good morning,

• Markets very calm ahead of Wednesday's FOMC decision;

• No data expected from Europe;

• US durable goods orders and consumer confidence in focus later.

It's been a very calm start to the week in the financial markets, especially by recent standards, driven largely by the lack of economic data and corporate earnings, and the Fed's latest policy decision on Wednesday.

It's very common for investors to be a little on edge in the run up to the latest FOMC decision because even when everyone thinks they know what's going to happen, the Fed has a knack of doing otherwise and creating complete chaos in the markets. The kind of volatility we can see following these announcements, even in response to the smallest things, can be unappealing to a lot of traders and therefore we tend to get less activity in the days before.

I think any major surprises tomorrow is very unlikely simply because there is no press conference following the decision, which means there would be no opportunity to question any big changes in policy or stance. There will be a statement released alongside the announcement but I think the FOMC would rather save any big announcements for those meetings when they can explain themselves, the next one of which is in December. With this in mind, I expect them to do as the markets are expecting and bring an end to the quantitative easing program with the final $15 billion taper and leave the statement largely unchanged, maintaining its commitment to keep rates low for a considerable amount of time.

This period of calm is probably a good thing for the markets when you consider what we've seen in the last few weeks. Everyone wants volatility in the markets but the kind of volatility we were seeing was excessive and driven by fear and panic, which makes life very difficult. This brief period of calm may help to ease some of that anxiety, while hopefully maintaining some of that volatility that has been lacking in the markets in recent years.

I expect another fairly calm day today, with the Fed decision only a little over 24 hours away. On top of that, there's few catalysts for the markets with the economic calendar looking a little bare. In fact, there's no notable data expected from Europe this morning and only a couple from the US later on in the session. Core durable goods orders for September is always one to keep a close eye on as it tells you a lot about confidence in the long term health of the economy. Consumer confidence is also important for the US given how big a role the consumer plays in total output. Both of these numbers are expected to improve which provides even more evidence of the strong recovery in the US.

The FTSE is expected to open 26 points higher, the CAC 17 points higher and the DAX 34 points higher.