AI's Debt Bill Is Coming Due 💳️

Welcome back to the Day Trading newsletter 📈

Bond yields finally crashed the AI party: the 10-year Treasury closed near 5.18% (the highest since 2007) and Wall Street started charging real risk premiums on AI-linked debt for the first time.

Stocks shrugged it off anyway, with the Dow, S&P 500 and Nasdaq all closing the week higher.

Let’s get into it 👇️ 

📆 Tuesday 9/29 — JOLTS Job Openings, August (10am ET): The first hard labor-market data of the week. A soft print would fuel bets that hiring is cooling faster than the Fed thinks; a strong one keeps yields elevated.

📆 Tuesday 9/29 — Consumer Confidence, September (10am ET): The Conference Board's read on household sentiment, out the same day as JOLTS. Watch whether it echoes the University of Michigan's four-month-low reading from this past week.

📆 Wednesday 9/30 — PCE Inflation & ADP Employment, August/September (8:15–8:30am ET): The Fed's preferred inflation gauge lands alongside the private-sector jobs count, both feeding directly into how the market prices the Fed's next move at a moment when yields are already near a two-decade high.

📆 Thursday 10/1 — ISM Manufacturing PMI, September (10am ET): A reading above 50 signals factory-sector expansion. Watch the prices-paid subindex especially, given how central inflation worries have become to the bond selloff.

📆 Friday 10/2 — September Jobs Report (8:30am ET): The week's headline event. With traders pricing real odds of an October rate hike rather than a cut, this is the clearest test yet of whether the labor market is cooling enough to change that calculus.

🛢️ Oil prices ended the week lower even after a Friday bounce, with WTI crude near $93.60 a barrel — down roughly 7% for the week — as traders priced in reported U.S.-Iran talks to reopen the Strait of Hormuz. Brent settled around $106. A deal easing the standoff would remove one of the biggest risk premiums baked into energy markets this year.

📉 Nike shares slid after Bank of America slashed its price target to $30 from $47 and downgraded the stock to Underperform, warning of "negative sales growth through fiscal 2027." The stock is down nearly 44% so far this year. BofA cited weak classic styles, disappointing new launches and excess China inventory.

📊 Costco topped Wall Street's estimates again, posting fiscal Q4 earnings of $6.75 a share — up 15% from a year ago — on $93.9 billion in sales, up 11.2%. Comparable sales rose 9.4%, helped partly by a one-time tariff-refund benefit. Membership fee income climbed 7.3% to $1.85 billion.

⛽️ Consumer sentiment fell to a four-month low in September, with the University of Michigan's final reading dropping to 48.1 from 51.7 in August. High gas prices and tariff concerns were the main drag, the survey found — a reminder that Wall Street's rally hasn't translated into a better mood for everyday households.

🔼 CoreWeave shares climbed this week after JPMorgan upgraded the AI cloud-computing company to Overweight and raised its price target to $125 from $120, citing strong demand for its shorter-term compute contracts. The call is a rare bright spot for a stock caught up in the same debt-financing scrutiny hitting the rest of the AI infrastructure trade.

💰️ SoftBank priced the largest high-yield corporate bond sale on record — $11.1 billion across dollar and euro tranches, with the longest dollar slice paying 9.75% over 7.5 years. The proceeds help fund SoftBank's roughly $64.6 billion bet on OpenAI, in which it will hold about a 13% stake.

💵 Bitcoin is holding near $84,000 after pulling back from a weekly high above $87,300, but it's still on pace for its second-best third quarter on record, up roughly 43.5% since July. U.S. spot Bitcoin ETFs pulled in about $2.39 billion in net inflows in just the five days through September 25.

The 10-year Treasury yield closed the week at 5.18% — its highest level since 2007, and up roughly a full percentage point since January — and corporate borrowing costs have climbed right alongside it.

Data-center operators who financed their AI buildouts with debt are suddenly paying far more to borrow than they were a year ago, with rates on new deals running roughly 6% to 7% versus about 3% previously.

CleanSpark, a smaller miner-turned-data-center operator building a Meta-linked facility, priced $2.28 billion in junk bonds with initial talk near 8.25% (the deal ultimately closed September 25 at a 7.875% coupon, priced at 98.5 cents on the dollar) and still drew more than $10 billion in orders.

CoreWeave has separately flagged that every 1-percentage-point rise in rates adds roughly $30 million to its annual interest bill on its floating-rate debt.

But not every AI player is in the same boat.

Microsoft, Amazon, Google and Meta carry investment-grade credit ratings and can still borrow cheaply; it's smaller, junk-rated names like CoreWeave and Oracle — leaning on debt to fund data centers — that are exposed.

Oracle shares are down about 30% this year and 7% just this week amid financing questions around its New Mexico project.

JPMorgan estimates as much as $4.1 trillion in AI-related debt could be issued through 2030, and the extra yield investors now demand for AI bonds (115 basis points over Treasurys, versus 78 for the broader corporate market) shows Wall Street is starting to price that risk in.

What to watch:

• Whether more mega debt deals keep clearing at these prices, and whether Q3 earnings (ramping up in October) finally show hyperscaler cash flow catching up to their spending.

• The gap between AI promise and AI profit is exactly what higher rates make more expensive to ignore.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.