Global CLO Strategy: CLO Tracker October 2026 – Keep Calm and Carry On

This is Morgan Stanley's October 2026 Global CLO Tracker, titled "Keep Calm and Carry On." As slower inflation and resilient macro data lift expectations for further rate hikes, we believe a higher-for-longer regime into 4Q 2026 will reinforce bifurcation in the leveraged loan market and drive greater dispersion down the CLO cap stack. In September, CLO AAAs widened by ~2.5bp, holding up better than non-QM (~15bp), prime Auto (~8bp) and CMBS (~3bp) AAAs given lower interest rate duration. CLO ETF inflows accelerated to $3.2bn in September, the highest monthly inflow since early 2025, with no clear signs of floating-to-fixed rate rotation. Healthy borrower earnings should cushion the impact of higher rates, keeping defaults in check;