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Jan von Gerich, Global Fixed Income Strategist for Nordea Markets, suggests that the outlook of further debt ceiling battles in the US, the chance of impeachment, increased uncertainty and the low odds of further fiscal stimulus burden the outlook for general risk appetite, the USD and long yields.

Key Quotes

“The USD, long yields and equity prices all surged, when Trump was elected. There is now pressure for the opposite moves, but since this time the election result was not major surprise, the moves will probably take place more gradually and the magnitude of the moves should be smaller compared to 2016.”

“In the short term, there will probably be a short-term bounce in risk-appetite, as the uncertainty related to the election results lifts.”