Although the US economic recovery has picked up and we expect yields to rise in the second half of 2020, structural forces may help limit the size of the move. The pandemic-driven demand shock, the Federal Reserve, and disinflationary pressures may likely keep yields low for quite some time.

Downward Pressures on Yields Remain

The US economic outlook has improved quite a bit since March, as more evidence of economic recovery has emerged in timelier economic data. The record hiring evident in the May US Bureau of Labor Statistics jobs report and the record surge in retail sales last month per the US Census Bureau are two exam

Index Performance – Week ending 6/26/20

S&P 500 Index: -2.9%

Dow Jones Industrial Average:  -3.3%

Nasdaq Composite:  -1.9%

Equities

US equities pulled back this week in the wake of increased COVID-19 cases in southern and western states, bank stress test restricting dividend payouts, and stretched equity valuations. Like their larger counterparts, small and mid-caps also gave back ground this week.

Many sectors were in the red this week. Energy, financials, industrials, and real estate were all down more than 2%. One bright spot this week was technology, which finished positi

The economy is moving in the right direction, as many economic data points are coming in substantially better than what the economists expected. From May job gains coming in more than 10 million higher than expected and retail sales soaring a record 18%, how quickly the economy is bouncing back has surprised nearly everyone.

“As good as the recent economic data has been, we want to make it clear, it could still take years for the economy to fully come back,” explained LPL Financial Senior Market Strategist Ryan Detrick. “Think of it like building a house. You get all the big stuff done early, then some of the sm

What is a Collateralized Loan Obligation (CLO)?

Collateralized loan obligations (CLO) are portfolios of leveraged loans, a type of below-investment grade loan usually taken out by more heavily indebted companies. Each CLO is divided into a series of tranches with different degrees of risk. The more senior tranches receive their interest payments first, and therefore, have a higher credit rating. Since the loans carry a floating rate of interest, CLOs provide investors with better protection from inflation and rising interest rates than bonds that have fixed payments.

Who typically invests in CLOs?

Banks, insur