With the big stock-market gains over, it’s time for some unusual ‘coupon clipping,’ HSBC strategist says

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The economy will be operating somewhere between 5% to 10% below its pre-pandemic level for the next six to 12 months, this strategist said. He called the situation, with rangebound markets, “a coupon-clipping environment.”

“We haven’t got a big qualm with the market at this point in time. I don’t see really significant, anomalous valuations in the market, and that takes me to this idea of staying invested, being diversified, but not being too tactically adventurous,” said Joseph Little, global chief strategist at HSBC Global Asset Management.

The global economy, he said, is entering a slower phase after the rapid recovery since the initial lockdowns. The economy will be operating somewhere between 5% to 10% below its pre-pandemic level for the next six to 12 months. He called the situation, with rangebound markets, “a coupon-clipping environment.”

Investors may want to consider more exotic parts of the fixed income space, such as high-yield Asian corporate debt, or Chinese government bonds, he said. Gilead Sciences GILD, +1.31% said late on Thursday that a late-stage study of its experimental COVID-19 treatment showed it shortened time to recovery. The company said a study of remdesivir, which goes by the trade name Veklury, plus standard care shortened the time of recovery by an average four days.

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