Turning to fixed income, Antoine Bouvet, rates strategist at Japanese bank Mizuho International, sees a near-term reversal in the sharp fall in German government bond (bunds) yields and U.S. Treasury yields witnessed on Wednesday morning.
Bouvet says, "I expect the bund rally to reverse in the coming days when the focus turns back to domestic factors for European government bonds. There is still sizeable monetary policy uncertainty in the euro zone, in particular 'taper talk' and this is likely to put upward pressure on yields."
As for the U.S. government bond market, Bouvet added, "I think the (Federal Reserve) will hike in December, but that it will be the last one. Weak growth prospect will support the long end and I think the curve will flatten once the 10-year and 30-year U.S. government bond auctions are out of the way tomorrow."
In terms of investor appetite for corporate debt, Armin Peter, global head of syndicate at Swiss bank UBS believes this will be a very short-term blip for deal momentum.
According to Peter, "The market was hoping for doing deals as early as today (Wednesday) subject to a Clinton win. We won't see any deals now as we have to digest the events overnight in the U.S. That being said - and as in the past - markets will adjust and move on. I'm certain that come next week we will see deals returning as the dust will have settled by then."