LaVorgna said the stimulus could be a positive jolt for the economy, and it's yet to be seen if Yellen will let the economy run hot as she recently mentioned. The Fed chair suggested that the FOMC could tolerate a little more inflation and still keep rates low to make sure the economy picks up steam. He expects two rate hikes for next year, in line with the Fed's current forecasts.
Anderson said the risk is that the Fed sound more optimistic, which would be hawkish in its meeting statement. "Optimistic in the sense that a lot of the growth concerns they've had following the Brexit vote, a lot of those things have come and gone, and so those downside risks to the global outlook have faded and that will give a green light for the Fed to move forward here," he said. "It's not just the U.S. We're seeing a synchronized global growth rebound here following the Brexit vote, which nobody had really factored into their growth forecasts."
Some of the more hawkish Fed officials could view the Fed as behind the curve, and that could show up in the minutes of the meeting. The unemployment rate at 4.6 percent "might raise some eyebrows" among Fed officials, as it could be taken as a signal that the Fed has let the labor market improve too much without moving rates. Anderson said the Fed moving to hike rates as the economy improves would be taken as things "returning to normal" after the extraordinary easing of the post-financial crisis years.
Anderson said the fiscal stimulus talk from Washington and tax cuts should help the economy. "We're cautiously optimistic for U.S. and global growth prospects for next year," he said. He revised 2017 GDP growth to 2.2 percent, and 2018 was raised by 0.5 to 2.3 percent.
Besides the Fed meeting, there are several key economic reports in the coming week, including retail sales and industrial production Wednesday and housing starts Friday. There are also Treasury auctions Monday and Tuesday, for reopened three-year and 10-year notes and 30-year bonds.
Some strategists say yields may have been moving higher ahead of those auctions. Both Anderson and LaVorgna view the move higher in yields and the steeper curve as healthy. The curve is the steepest it's been between the two-year and 10-year since last December.
"They're not waiting for the Fed to move. I think it's a good sign. There's signs of sustained growth, global growth and U.S. growth," Anderson said. "We're going to be putting the financial crisis and the great recession in the rear-view mirror. It only took a decade."
LaVorgna said the steepening yield curve is a positive. "Look at the rotation within the equity market, more toward cyclicals or those industries more sensitive to the economy. Those are the things I would focus on," he said. "We're at the steepest yield curve in a year. That to me is an unambiguous sign of faster growth."
Financials led the market higher in the past week, gaining 4.8 percent. The S&P tech sector was second best, up 4.2 percent.