Bank Julius Baer predicts extended high interest rates based on US Fed's data driven decisions

“The Fed is data dependent and if the data does remain so surprisingly robust then it is safe to assume that rates won’t come down until well into the middle or even second half of next year,” Matthews said.

“The strength of the US economy is why bond yields have risen from 3.8 to 4.2 percent over the last 30 days and the dollar has strengthened and until we see signs of the economy ebbing, the market will increasingly take the view that the rates are going to stay high well into the next year,” he added.

Matthews also touched upon the short-term prospects of the market. He suggested that the market might experience a period of range-bound movement. “The volumes are thin in the market because many people are still away, the results are largely behind us and on an average, companies beat expectations. We can see that the market was nonplussed with that because going into the results, expectations were very low and I just do not see many catalysts going forward and by summing it all up, short-term, we are more likely to drift than go up,” he said.

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