The social distancing required to contain the coronavirus outbreak has led to an unprecedented forced shutdown of the US economy in the short term, with substantial downgrades to GDP and earnings growth likely. But in anticipation of a peak in cases and potential drug approvals, investors should look for opportunities now to prepare for a rebound in the months ahead.

When fears of the new coronavirus seized hold of markets in early March, already low government bond yields fell to record levels amid a historic “flight to quality.” Given the impending global recession, government bonds will likely continue to be attractive for now – although their yields will be low and liquidity concerns will make them volatile. But over the long term, we favor spread products such as investment-grade and high-yield corporate bonds.

The US Federal Reserve cut rates to near-zero over the weekend in a bid to ease pressure on the global financial system. Yet stock markets are unlikely to be reassured. With the course of the coronavirus outbreak uncertain and governments acting increasingly aggressive to contain or delay its spread, a global recession looks all but certain. Investors should recognize that we are in bear market territory and adjust accordingly. US Treasuries and gold could do well, but investors may also want to add risk in undervalued sectors such as energy.