• Fed has history of using off-cycle meetings to set stage for policy action
• OK, so it has only happened one--maybe two--times.
• Is now one of those times?

I'm not sure if this term is common parlance when referring to the FOMC Announcements that are NOT accompanied by the periodic press conference and economic projections (aka "dots"), but I have been referring to them as "off cycle."  No matter what words we use to distinguish the two types of Fed Announcements, market participants almost unanimously agree on one thing: the Fed is vastly more likely to make policy changes at "on cycle" meetings (those that DO include the Yellen press conference and the dots).  

The reason for this theory has most to do with the press conference.  Markets logically conclude bigger market reactions to actual changes in Fed policy and the assumption is that Yellen can verbally push back on any overdone volatility (or simply push back in the opposite direction from the one implied by the policy change).  In other words, if the Fed is going to hike, Yellen will be ready to add a dovish tone to the hike.  If the Fed is going to lower rates, Yellen could be there to talk about transitory inflation problems and the expectation that things will turn around.

Last time around, Yellen let the dots do the talking, and markets quickly adjusted toward lower rates until European bond markets and oil prices bounced at the beginning of the month.  Now we're left to wonder if today's announcement will play a similar role to the Fed's late October announcement.  At the time, I said it was a clear message about the impending December rate hike (as did almost anyone else that read the thing).  Markets reacted accordingly.

To be sure, we're approaching this off-cycle meeting from a different place.  Rather than the relatively flat October-style range, we've been selling-off for more than 3 weeks.  Is this the market's way of getting ahead of the Fed Announcement it expects to read like October's?  If so, we might have a fighting chance of avoiding a similar sell-off.  If we don't avoid such a sell-off, the next support levels near 2.0% in 10yr yields will be coming up very quickly.