As expectations for a December taper ramp up, one analyst told CNBC the Federal Reserve is set to implement a 'mini-taper' designed to get the ball rolling before its chairman steps down.
"I think what we'll see is a mini-taper... I would expect about $5 billion a month starting in December, not exactly the $10 or $15 or $20 billion dollars a month that people had feared. So they are going to kind of split the baby," Scott Nations, chief investment officer and president of Chicago-based NationsShares, told CNBC Asia's "Squawk Box" on Wednesday.
(Read more: Get ready, here it comes: A December taper )
Nations said one of the drivers for a December taper is the fact that Federal Reserve Chairman Ben Bernanke will want to start it before his term expires at the end of January.
"I've been talking about a fourth quarter taper for a long, long time. I think we are still going to see that, but it's only because Bernanke wants to begin the taper on his watch. And if he's going to start the taper, then he's going to have to pick up the pace, because his term ends pretty quickly," he added.
Taper talk has been in focus ever since Bernanke in May raised the prospect of scaling back U.S. monetary stimulus, prompting a vicious sell-off across most asset classes. Since then, industry watchers have attempted to guess the timing of when the Fed would taper its $85-billion-a-month asset-purchase program, and many wrongly pinpointed September.
(Read more: Waiting for taper start? You may have missed it )
Now, opinion is divided between those who expect tapering to happen next year, and those who still think it will happen at next week's Federal Reserve meeting fueled by more positive economic data out of the U.S. in recent weeks.
Furthermore, news that U.S. politicians have agreed a long-awaited budget framework has also boosted expectations of a December taper.
Nations said he was firmly in the December taper camp, and said he doubts that equity investors would react in the same way to how they did back in May.
"We saw a good jobs number on Friday, a good gross domestic product report before that, and the market did not sell off on one of these 'good news is bad news' situations. So I think people are more nuanced and they should be," he added.
Data released Friday showed that the U.S. economy added 203,000 jobs in November, above expectations for the addition of 180,000 jobs, while the unemployment rate dropped to a five-year low of 7.0 percent.
Nations said bond investors should not be so relaxed, however.
"In the equity world, I'm not entirely certain that the tapering is going to cause tremendous problems like it likely will in the U.S. long-term bond market," he said. "I don't know how you go into the U.S. long-term bond market as a buyer knowing that the biggest buyer in the world is about ready to exit that market."
However, he added that once yields on 10-year Treasurys spike over 3.5 percent, equity investors should start to get worried again.
(Read more: December Fed taper won't bother investors: JPM's Lee )
"I think it [the yield] will be over 3 percent very quickly and I think over 3.5 percent is when equity investors need to start looking with what I describe as jaundiced eye," he said, adding that he expected yields to reach 3.5 percent by the U.S. summer.
Yields on 10-year Treasurys traded at around 2.8 percent in early trade in Asia on Wednesday.
- By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie
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