Equities slipped to start the new month and may fall further if the FOMC spooks the market on Wednesday. The FOMC is expected to hike interest rates by at least 50 basis points and could go for 75. Even if this interest rate hike is only 50 basis points the market should expect a hawkish statement from the Fed and a high likelihood for aggressive policy adjustments this year. As it is now, the market is pricing in at least 12 25 basis point hikes by the end of the year which is enough to put the base rate at the highest levels since before the Housing Bubble Burst.

Also on tap this week is the NFP report. The economists are expecting another strong month of job gains with net job creation topping 400,000. The risk for the market is that wages will continue to rise and accelerate, driving inflation throughout the economy.