Senior Loans and CLOs Gain Favor in a Higher-for-Longer Rate Environment

Nuveen’s Global Investment Committee highlights senior loans and collateralized loan obligations (CLOs) as potentially attractive fixed-income allocations as persistent inflation and elevated interest rates reduce the likelihood of near-term policy easing.

• Rising energy-driven inflation has pushed market expectations for Federal Reserve rate cuts further into the future, increasing demand for floating-rate credit instruments.
• Senior loans have outperformed the broad U.S. bond market year-to-date, benefiting from higher income generation and lower duration sensitivity.
• CLOs offer diversified exposure to leveraged loans and have historically combined low default rates with competitive yields, making them appealing amid elevated market volatility.

Read the full commentary for further insight into portfolio positioning and credit-market opportunities in a volatile macroeconomic environment.