What is the market consensus on Fed tapering timing?

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Market Consensus Points to Fourth Quarter for Fed Tapering Announcement

The prevailing sentiment among market participants suggests that Federal Reserve Chair Jerome Powell is likely to announce the tapering of bond purchases in the fourth quarter. Investors anticipate that Powell will provide a clear indication of this policy shift at a meeting prior to the official announcement.
Hawkish Stance from Regional Fed Presidents

Several regional Federal Reserve presidents have publicly advocated for a reduction in the Fed's asset purchase program. Dallas Fed President Robert Kaplan indicated expectations for interest rate increases next year, a stance perceived as more hawkish than his previous remarks. Kansas City Fed President Esther George and St. Louis Federal Reserve President James Bullard also downplayed the impact of the Delta variant, with Bullard reiterating his call for the Fed to begin trimming its US$120 billion in monthly bond purchases soon.
Anticipation of Powell's Speech

Market participants are closely scrutinizing Fed Chair Jerome Powell's upcoming speech at the Kansas City Fed's central banking conference for guidance on future policy. While some analysts expect Powell to lay the groundwork for an eventual taper, others believe he may adopt a cautious tone due to recent macroeconomic shifts. The conference, held virtually this year, has historically been a venue for policymakers to signal policy direction.
Investor Expectations for Powell's Guidance

The general market consensus is that Powell will likely signal tapering in the fourth quarter, with a clear indication provided at a meeting preceding the formal announcement. Some strategists suggest that specifying the exact timing of tapering in his current speech might not be beneficial, and a lack of a definitive hint could be mildly positive for stock markets. In such a scenario, risk-sensitive currencies might strengthen, while the yen could weaken.

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What is the market consensus on Fed tapering timing?

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