US Treasury Raises Record $839 Billion as Nasdaq and Semiconductor Stocks Slide
The US Treasury raised a record $839 billion through 11 auctions of Treasury bills, floating-rate notes and 2-year, 5-year and 7-year securities during the week, surpassing the previous record of approximately $834 billion set during the same period last year.
Most of the proceeds were used to refinance maturing government debt, while actual net new borrowing amounted to approximately $106 billion. Weekly net Treasury issuance had previously peaked near $362 billion during March and April 2020, when the US government was raising funds to support the economy during the COVID-19 pandemic.
The record issuance has raised concerns about the US government’s future borrowing costs. Tony Fallon of Mischler Financial Group warned that sustained heavy debt issuance could force the Treasury to offer higher yields to attract investors, potentially increasing financing costs.
Meanwhile, US equities opened sharply lower on Friday, with the Nasdaq Composite declining 2.26% and the S&P 500 falling 1.16%. The Dow Jones Industrial Average edged up 0.08%.
Technology and semiconductor stocks led the weakness. Intel plunged 25.75% following its earnings report, while AMD declined 10.22% and Qualcomm fell 5.71%. Intel’s five-year credit default swap spread surged to a record 123.5 basis points, marking its largest single-day move since October 2022 and reflecting increased investor concern over the company’s credit risk.
Meta’s $225 Billion AI Spending Forecast and France’s Credit Outlook Add to Market Concerns
Concerns over the financial sustainability of artificial intelligence investments intensified after S&P Global revised Meta Platforms’ credit outlook to negative from stable, while affirming its AA- rating. The ratings agency warned that Meta’s rapidly expanding capital expenditure could weaken its financial position and increase leverage.
S&P expects Meta’s capital spending to exceed $225 billion in 2027, with free cash flow deficits potentially continuing through 2028. The agency also expects the company’s leverage to breach its downgrade threshold. S&P said Meta’s ability to generate profits from AI investments currently trails that of some competitors, increasing uncertainty around the returns from its expanding data-centre infrastructure.
Meta’s shares recorded their worst monthly performance in four years following its earnings announcement, according to Reuters. Although S&P maintained the company’s AA- rating, it warned that sustained spending and negative cash flow could eventually lead to a downgrade.
A separate Reuters analysis found that Microsoft, Alphabet, Amazon, Meta and Oracle generated just 9.3% of operating cash flow in shareholder returns this year, compared with 27.4% previously. Their combined capital expenditure doubled to approximately $556.9 billion, exceeding record operating cash flow and producing a free cash flow deficit of around $14 billion. Share buybacks also declined by 83%. The analysis indicated that capital spending exceeded operating cash flow for the first time since 2011, highlighting the growing financial demands of the AI investment cycle.
Credit concerns also extended to Europe. Fitch Ratings revised France’s sovereign credit outlook to negative from stable, while affirming its A+ rating. The agency acted outside its published review calendar, citing rising public debt, higher borrowing costs and political uncertainty ahead of the 2027 presidential election.
Fitch projects that France’s government debt could reach approximately 124% of GDP by 2028, while the fiscal deficit could remain at 5.5% of GDP in 2027, above the government’s 5% target. The decision followed Moody’s decision to maintain a negative outlook on France on October 23. French 10-year government bond yields also crossed 5% during October, reflecting growing concerns over the country’s fiscal position.
How much did the US Treasury raise through weekly debt auctions?
The US Treasury raised a record $839 billion through 11 auctions of Treasury bills, floating-rate notes and 2-year, 5-year and 7-year securities.
How much was the US government’s net new borrowing?
Approximately $106 billion, with most of the remaining proceeds used to refinance maturing Treasury debt.
Why did the Nasdaq fall 2.26%?
Technology and semiconductor stocks faced selling pressure following disappointing earnings and concerns over AI-related spending and financial returns. Intel, AMD and Qualcomm recorded significant declines.
Why did S&P Global revise Meta’s outlook to negative?
S&P cited Meta’s rapidly increasing AI infrastructure expenditure, weaker expected free cash flow and the possibility of leverage exceeding its downgrade threshold.
How much could Meta spend on capital expenditure in 2027?
S&P Global forecasts that Meta’s capital expenditure could exceed $225 billion in 2027.
Why did Fitch revise France’s outlook to negative?
Fitch cited rising government debt, higher borrowing costs, fiscal deficits above the government’s target and political uncertainty ahead of the 2027 elections.
How much could France’s government debt reach by 2028?
Fitch projects that French government debt could reach approximately 124% of GDP by 2028.
How much are major technology companies spending on AI infrastructure?
Microsoft, Alphabet, Amazon, Meta and Oracle collectively recorded approximately $556.9 billion in capital expenditure, according to the Reuters analysis.
