U.S. Sectors Face Downgrades Amid Policy Uncertainty

Fitch Ratings downgraded 25% of U.S. industry sectors to “deteriorating,” citing unclear trade and tariff policies under the Trump administration. The U.S. Dollar Index (DXY) at 97.806, down 0.67%, reflects market caution, with EUR/USD at 1.1700 (+0.4%) and GBP/USD at 1.3600 (+0.3%). Copper futures, up 0.65% to $5.6410 per pound, signal mixed commodity sentiment. Policymakers are seeking to clarify trade policies to restore confidence and stabilize credit markets.

Policy Risks Weigh on Sectors

Fitch highlights persistent uncertainty, slowing economic momentum, and expectations of prolonged high interest rates as key drivers. The lack of clear governance on trade and tariffs disrupts U.S. consumer and business confidence, impacting credit outlooks. Despite reduced U.S.-China trade tensions lowering recession risks, 25% of sectors face downgrades, with potential ripple effects on employment and investment.

Economic Growth Outlook

Fitch raised its 2025 U.S. GDP growth forecast to 1.5% from 1.2%, but anticipates further deceleration. The 10-year Treasury yield at 4.64% underscores safe-haven demand amid uncertainty. Investors do monitor DXY support at 97.200 and copper’s $5.6160 support level. Without clear policy direction, sectors risk further deterioration, threatening 2025’s fragile 6% global equity gains. Coordinated trade and fiscal policies are critical to bolster confidence and prevent deeper economic slowdown.