"What's most important about that meeting is not what the Fed does, but what they say," Brian Rehling, co-head of global fixed income strategy at Wells Fargo, told media members at a recent briefing. Rehling added that he expects the Fed to raise rates next week and then twice more in 2016 — likely in mid-summer and again in December, after the presidential election.
Inspiring at least some of the worry among market participants is that the Fed will be tightening policy as its global counterparts are loosening, mimicking the FOMC's strategy over recent years of cutting rates and printing money to buy financial assets.
"The key theme over the next year ... is really going to be divergence," Rehling said. "This is the first time in some time we've seen such a pointed divergence."
Read MoreThis industry may feel the most heat from rate hike
Investors have been indiscriminate in the move to cash, pulling money out of both bond and equity funds as the big Fed date approaches.
Equity funds saw $6.4 billion in outflows over the past week while market participants pulled $6.1 billion from fixed income, according to BofAML. Yield plays suffered in particular, with high-yield funds losing $3.8 billion — the most in 15 weeks, while bank loans and master limited partnerships also sustained losses.
The trend comes amid a rocky time for stocks.
The S&P 500 has slipped 3.5 percent in December and is now negative year to date, with a 1.5 percent decline heading into the final weeks of trading. Small-cap stocks have taken it especially hard, with the Russell 2000 declining 5.1 percent this month and 5.6 percent for 2015. In sector terms, rate-sensitive financials have been the second-worst on the S&P 500, diving 4.6 percent this week despite seeing $1.1 billion in inflows, primarily to the SPDR Financial Select Sector exchange-traded fund.
Read MoreBanks and the Fed: Why this time is different
"Everybody's betting on the Fed's language, not whether they're going to increase or not increase," said Michael Yoshikami, founder and CEO of Destination Wealth Management. "Certainly if you're a trader you don't want to be exposed based on what adjectives (Fed Chair) Janet Yellen is going to use."
Yoshikami expects the Fed to telegraph a highly dovish message — essentially that the rate increase does not signify a substantial difference in the accommodative policy in place since the financial crisis but rather a small first step towards normalization.
"People are unsure of what's going to happen," he said. "If they do come out and they're very dovish, the market is going to react fairly positively."