Investors bet on stronger credit markets as election results come in

FILE PHOTO: A voter fills out her ballot during early voting at ONEOK Field in Tulsa, Oklahoma, U.S., October 30, 2020. REUTERS/Nick Oxford

NEW YORK (Reuters) – Investors made bullish bets on U.S. corporate bonds on Wednesday while the equity market rallied as results from the presidential election came in.

President Donald Trump and his Democratic rival Joe Biden both still have possible paths to victory, but investors are currently betting on a Biden win, with the Republican party keeping a hold of the Senate, said Kevin Giddis, head of fixed income at Raymond James.

Markit’s North American High-Yield CDX Index CDXHY5Y=MG – which tracks the cost to insure high-yield corporate debt and is a proxy for the junk market – rose in price to 104.83%, as investors bought the contract. Spreads on Markit’s North American Investment Grade CDX Index CDXIG5Y=MG narrowed to 57.61 basis points, as investors there also bet on a fall in defaults.

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