August 1 - August 31, 2020
In August, high yield bond and leveraged loan markets delivered gains of 0.98% and 1.50%, respectively
The presidential election moved to the forefront, with increased volatility likely to occur in coming months
The Fed announced a change to inflation policy expected to keep interest rates “lower for longer”
Issuance in August was much higher than expected, driven by BB-rated issuance
Presidential politics moved to center stage in August as both political parties hosted their respective conventions, albeit somewhat unconventionally due to the ongoing pandemic. In all likelihood, the market will increasingly focus on the upcoming U.S. presidential election, with heightened volatility occurring as a result. In addition, the fragile relationship between the U.S. and China deteriorated further in August, as President Trump, citing national security concerns, issued an executive order in an effort to either try and force the sale of the popular social media app TikTok, which is owned by a Chinese company, to an American company or otherwise require it to close its U.S. operations. Furthermore, the U.S. State Department requested that U.S. colleges and universities divest Chinese holdings in their endowment portfolios. The markets will be closely monitoring for any negative developments between the two countries that could threaten the adherence to the previously agreed-upon Phase 1 trade deal.