We will get the Federal Reserve Open Market Committee’s (FOMC) statement on its decision on the Fed’s policy, which should include some forward guidance.

The decision itself is almost certain to be completely overlooked by financial markets as it is expected to focus on the Fed’s policy decision in December and the presidential elections in the meantime.
 

However, the nuances of the Fed’s communication, at least, could lay open the possibility (hopefully) for a more honest debate about what is driving the Fed processes at present.
 

It might be helpful recalling some quotes of what Fed Chair Yellen said during her press conference after the FOMC had decided to let the Fed funds rates unchanged on September 21: “So far this year, most measures of labor market slack have shown little change … As transitory influences holding down inflation fade and as the job market strengthens further, we continue to expect inflation to rise to 2 percent over the next two to three years … Returning to monetary policy, the recent pickup in economic growth and continued progress in the labor market have strengthened the case for an increase in the federal funds rate … We don’t want the economy to overheat, and if things continue on the current course, I think that some gradual increases will be appropriate.”

Besides that, the October 7 Fed statistical release on consumer credit is worth a look as it shows consumer credit increased at a seasonally adjusted annual rate of 8.5 percent with revolving credit increasing at an annual rate of 7 percent, while non-revolving credit increased at an annual rate of 9 percent. All these numbers are at multi-year highs.

So, the big question is if the Fed is looking to inflation, unemployment, credit or money supply?

Now, a few sentences in today's FOMC statement will not really give much scope for all this, but without any doubt, every word will receive an indecent amount of scrutiny.

In the meantime, we have of course politics.

The Federal Bureau of Investigation (FBI) has apparently learned how to use Twitter in time for the Presidential election, and that combined with volatile moves in opinion polls has led to an increased degree of risk aversion in financial markets.
 

On Tuesday, the VIX volatility index was up to the 20 points area. The VIX measures the implied volatility of S&P 500 index options and is often referred to as the fear index or the fear gauge and represents a popular measure of the markets’ expectations of stock market volatility over the next 30 days.

Meanwhile, we have also seen stocks as well as the dollar being rattled by the tightening in the U.S. election race while we saw bonds rising alongside gold, the Swiss franc and Japanese yen, with the yield on 10-year U.S. Treasuries falling for the third day in a row.

All that said, it might be good to remember that given the separation of powers and the electoral college structure, financial markets are not well suited to managing the nuances of fluctuations in U.S. political risk.

The enhance for all of international investors, who may be logically presumed to be less familiar with the U.S. political process, suggests their relatively blunt interpretation of events.

In the Euro area, in Germany unemployment fell to 6 percent, which is its lowest level since the crisis and is certainly worth a look as the strength of the German labor market lies behind the strength behind the strength of the German consumer, but also lies behind the relative increase in German inflation.
 

Once again this is positive for Germany, but underlines its divergence with the other Euro area states.
 

For comparison, U.S. unemployment stands at about 5 percent at present.
 

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments.