US business sentiment has also weakened, with companies pulling back on hiring and investment. Despite 78% of S&P 500 firms beating earnings estimates in the first quarter, management teams have turned cautious. Man Group notes that forward indicators such as capital expenditure plans have dropped to their weakest levels since 2020. The outlook is clouded by geopolitical risks and the Biden administration’s shifting trade policies, including aggressive tariff hikes earlier this year.
Man Group believes the credit cycle is entering a new phase, with early signs pointing to a transition from late expansion to early downturn. While earnings have held up in 2025, the investment manager highlights growing stress in US credit markets and warns that the end of the cycle may not follow historical patterns. Instead of a broad-based downturn, the firm expects a sequence of mini cycles marked by rolling distress across specific sectors.
Corporate fundamentals remain solid, but several warning indicators have emerged. Consumer confidence has dropped, corporate capex intentions are at multi-year lows and credit card delinquencies have returned to pre-pandemic levels. The household debt burden is rising across mortgage, auto and student loans, with the recent resumption of defaulted student loan collections adding to pressure. Lower-income households are feeling the impact first, but the strain is beginning to appear more broadly.
