Income without illusion: navigating late-cycle credit markets

A fragile equilibrium in fixed income: high yields persist despite tight conditions, creating potential opportunities for disciplined credit selection.Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how elevated yields and tight spreads create a deceptively simple market environment that may reward active security selection and quality upgrades.Attractive yields meet tight conditions: credit markets currently offer equity-like income levels, but the cushion against market volatility is thinner than historical norms suggest.Selectivity becomes essential in late-cycle markets. With real differences emerging between strong and weak performers, choosing the right securities matters more than riding broad market trends.Upgrading credit quality and avoiding overly risky exposures while identifying overlooked opportunities helps investors capture income without overextending.