US Fed tapering in November less likely if market falls: Bank Julius Baer

Mark Matthews of Bank Julius Baer & Co, on Friday, said that the chances of tapering by the US Fed are much less if the stock market goes down between now and November.

“The major thing, I think, is the Federal Reserve, will it taper in November or not. A week ago, I would have said very comfortable they will taper. Now, I am not so sure given what is going on in China, given the supply chain disruptions. It's a more negative backdrop. However, we have not changed our asset allocation. We are not bearish, but certainly more nervous than a week ago,” Matthews said, in an interview to CNBC-TV18.

He further said, “There is a chance they might not taper in November after all and then again there's also a chance that they might. So that's the uncertainty that we are facing, but if the stock market goes down between now and then and the dollar goes up, then the chances of tapering are much less because the US central bank is highly reactive to the financial market.”

On the Indian equity market, Matthews said, “As long as interest rates remain low, I don't think that we are going into a global bear market, because ultimately, what is keeping stocks supported is interest rates and the real treasury yield in the US is still significantly negative. So, equities are not going into a bear market.”

For the entire interview, watch the video