Although some believe the central bankers will boost rates for the third time in less than 14 weeks, the market has seen a shift in thinking recently, with many traders arguing that the latest data on inflation and employment may keep the Fed on hold. Futures traders saw anticipatory rallies in stock and bond markets Monday as bearish players cleared out of short positions to protect themselves.

In a Bridge survey of economic forecasters, most believed the Fed would sit tight in October but said a November rate increase was a distinct possibility if signs of inflation or labor-market strains accelerated.

If the Fed doesn't act, said Dan Riley, director of institutional trading at Chicago-based futures brokerage LFG LLC, the announced bias is going to be key to near-term market direction. A neutral bias would cause stock and bond markets to rally, but a tightening bias would probably rock stocks.

Bonds should fare better in either case, Riley said, because they have priced in another rate move more aggressively.

And from a seasonal standpoint, the first week of October has been bullish for the credit market, noted William Noble, chief strategist at MarketHistory.com. Its research shows 10-year note futures have rallied in 14 of the last 18 Octobers, with an average gain of more than 1 percent during the month.

U.S. equities also have suffered the wrath of higher interest rates, which make corporate financing more expensive, reduce profits and typically slow consumer spending. But most market players thought the stock market could avoid one of its infamous autumn crashes.

Noble said sentiment at the end of September was weak, with only 43 percent of investors surveyed saying they are bullish.