Nomura Research discusses its expectations for the market reaction to this week's FOMC policy meeting.

"Barring a radically dovish surprise from the FOMC at its meeting next week (30-31 July), we expect the meeting to be followed by an increase in the number of investors choosing to "sell the fact", particularly among quick-moving hedge funds. Already, hedge funds' overall long exposure to US equities seems to have plateaued. In the US bond market as well, directional traders (CTAs, global macro hedge funds) have accumulated large net long positions," Nomura argues. Judging from the positions that investors have already established, we think an overall selling bias may develop in both the stock market and the bond market as investors make position adjustments," Nomura adds.