Economist Marc Faber, publisher of The Gloom, Boom and Doom report, says markets are headed for a short-term rebound.

"I think that near-term stock markets around the world are very, very oversold and most oversold since February, March 2009 and 1987," Faber tells CNBC.

"(It) doesn't mean that they can't go lower, but I think they will rebound."

This hasn't changed Faber's long-term bearish view of markets, especially those in the U.S.

"The strategists in the U.S., mostly brainless people, who are predicting S&P between 1400 and 1500 by year end, I think they will have to re-adjust their views and I think the markets may actually go lower," says Faber.

According to Faber, the sell-off that began after Standard & Poor’s downgraded U.S. credit to AA-plus from AAA has been so dramatic because investors don’t believe in the integrity of politicians and current economic policies.

"Nobody trusts (anyone) anymore, the Obama administration, the U.S. government, Congress, the people that voted for the debt increase and so on," Faber says.

The equities sell-off has boosted so-called “safe-haven” investments including Treasurys, driving 10-year yields down to 2.35 percent, despite the S&P downgrade.

Faber believes Treasurys are overvalued and that yields will have to rise.

"In my opinion, around this level, government bonds in the U.S. are the short of the century," Faber says.

Economist Nouriel Roubini says Standard & Poor's decision to downgrade the U.S. at a time of such severe market turmoil and economic weakness only increases the chances of a double-dip recession and even larger fiscal deficits.

"Paradoxically, however, U.S. Treasuries will probably remain the world’s least ugly safe asset: risk aversion, equity declines and a looming slump could even see treasury yields fall rather than rise," Roubini writes in the Financial Times.

However, avoiding another recession “might simply be mission impossible,” says Roubini.