The French Wake-Up Call We're Not Heeding
Government bond yields move higher again... And the French protest... Treasurys have more competition... The Mag Seven trade is back on... The next AI winners are not in that group... Mailbag: On diesel, nuclear plants, and U.S. debt... 'Yours in fiscal sanity'...
Government bond prices fell again today...
The 10-year and 30-year Treasury yields both hit intraday 24-year highs of 5.36% and 5.72%.
The 30-year mortgage rate followed suit, hitting a three-year high of 7.5%. And the average credit-card interest rate rose for the second straight month to 23.8%, according to LendingTree.
This isn't just a U.S. story, though. As Global Markets Investor shared on X this morning, the yield on the Bloomberg Global Aggregate Treasuries Index – which tracks government debt of investment-grade-rated countries – hit 4%. That's the highest level since September 2000...
Right now, International Monetary Fund ("IMF") Managing Director Kristalina Georgieva has one country she's singling out for rising yields – and it isn't the U.S.
France's issues sound familiar...
In an interview with CNBC on the sidelines of an event in Singapore, Georgieva said that France needs to reduce its budget deficit to show lenders that the country is creditworthy.
According to CNBC, Georgieva said there's a "very clear recognition in France that deficit needs to be brought under 5%."
France's budget deficit has exceeded that mark in five of the past six years, and the European Central Bank expects it to remain above that level in both 2026 and 2027.
At the same time, France has faced three weeks of student protests calling for more education funding and opposing other planned budget cuts.
Those issues sound similar to what we're facing in the U.S. (minus the student protests). We shouldn't have to remind readers of our government's runaway spending, but we'll give a quick refresher...
The U.S.'s own budget deficit was 5.8% of gross domestic product ("GDP") in 2025, and that figure has been widening since 2000, according to data from the St. Louis Federal Reserve.
In short, we're spending more and more relative to what we produce. And with spending also outpacing the government's income, the national debt continues to increase.
We'd like to think that what is going on in France would be a wake-up call to the U.S. and the rest of the world to bring spending back under control.
But as President Donald Trump said last week, a "certain level of inflation" could help reduce the $40 trillion U.S. debt load. That means more spending, more dollars flooding the economy, and a weaker currency.
Government debt isn't the only part of the credit market making waves...
Over the past few weeks, we've written about the growing amount of debt from companies looking to fund their AI investments, and its effect on Treasury yields.
As we wrote in the September 8 Digest, plenty of AI debt is hitting the public markets...
Combined, the five top hyperscalers – Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle – issued roughly $220 billion in bonds through August 10. Goldman Sachs now sees them issuing $250 billion worth this year and $400 billion in 2027.
That trend continued over the past week...
First, chipmaker Broadcom (AVGO) started the process to arrange for $60 billion in AI financing. Broadcom wants to help Anthropic and its other customers afford to buy Broadcom's chips, and it's accepting some of the risk on the loans.
Broadcom isn't alone... Last night, the Financial Times reported that SpaceX (SPCX) wants to raise $40 billion in debt to buy chips from Nvidia (NVDA). Of that $40 billion, $30 billion will come from the public markets with the rest coming from banks.
Between those two deals alone, that's $100 billion in new debt raised for AI. As recently as June, Morgan Stanley estimated that companies would raise about $570 billion in debt to fund their AI investments in 2026. We hit 17.5% of that estimate in one week from just two companies.
That's bad news for Treasury yields...
Between the amount of debt being offered and the creditworthiness of the borrowers, the government has more competition for its own Treasurys. More from the September 8 Digest...
Microsoft carries a AAA rating. Alphabet's is AA+. Amazon's is AA. The United States lost its last AAA years ago.
Think about what that means for an institution deciding where to park money for the next decade. One borrower prints its own currency but runs trillion-dollar deficits with no plan to close them... at least beyond rebundling debt and letting inflation take care of the rest.
The other has a fortress-like balance sheet and a AAA stamp, and it pays you more for the trouble. That's not a hard call. And every dollar that goes to Microsoft or Alphabet is a dollar that doesn't show up at a Treasury auction.
That threat isn't going away anytime soon...
Analysts at JPMorgan Chase estimated that we'll see more than $4 trillion in AI-related debt by 2030. On average, the U.S. government issued $4.8 trillion in long-term Treasurys in 2025, according to the Securities Industry and Financial Markets Association.
Over the three-year period from 2027 to 2030, that would come out to about $14.4 trillion in new Treasurys. So AI debt could compete with more than 25% of total long-term Treasury issuance over the next few years.
While AI isn't the sole reason for rising U.S. government bond yields, the flood of AI-related debt over the next few years could continue to put upward pressure on Treasury yields.
Turning to stocks, there's the Magnificent Seven, and there's everything else...
Over the course of the third quarter, the S&P 500 Index rose about 2%. But without four stocks – Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), and Nvidia (NVDA) – the month would've been a lot worse...
According to Citadel, those four companies accounted for a 3% gain for the S&P 500, while the "rest" of the Index subtracted about 1.5%.
And when you look at the Magnificent Seven as a whole – those four companies plus Amazon (AMZN), Alphabet (GOOGL), and Tesla (TSLA) – the outperformance is even stronger... The Roundhill Magnificent Seven Fund (MAGS) rose more than 11% in the third quarter.
Put simply, the "buy Big Tech" trade is back on. And folks are piling in...
According to Barchart, ETFs that track the Mag Seven saw their largest monthly inflows ever in September.
As our colleague and True Wealth Systems editor Brett Eversole put it in yesterday's DailyWealth, "AI has become the only trend that matters." And many investors are playing it by going straight to the Mag Seven.
The Mag Seven may be the easiest AI exposure, but it's not the best right now...
Brett recently filmed a special video laying out what he calls the "next stage" of AI. As he said during his presentation...
Yes, the first phase of this AI boom, from 2022 until now, made a handful of giant companies even bigger...
The next stage is going to be about everything sitting just behind them – the companies actually cashing in on AI now that Phase 2 has arrived.
And stocks in this new group are the ones that Brett believes will fuel the AI "Melt Up." Brett lays out all the details in his presentation.
If you haven't watched Brett's message yet, we urge you to do so here.
New 52-week highs (as of 10/6/26): AbbVie (ABBV), Advanced Micro Devices (AMD), Arista Networks (ANET), Alpha Architect 1-3 Month Box Fund (BOXX), iShares MSCI Japan Index Fund (EWJ), GitLab (GTLB), Hewlett Packard Enterprise (HPE), Lumentum (LITE), Nvidia (NVDA), Okta (OKTA), Palo Alto Networks (PANW), Qualys (QLYS), Invesco S&P 500 Equal Weight Technology Fund (RSPT), and Zebra Technologies (ZBRA).
Our inbox is buzzing again today... We've got thoughts about the White House's diesel "fix" and big tech's power plans, which we wrote about yesterday... plus some perspective on the U.S. debt, which we covered in Monday's edition... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"I work for a fuel wholesaler/convenience store supplier. Dyed diesel and on road diesel are the same fuel. They add dye at the rack where trucks are loaded and charge 1/2 cent per gallon for the privilege. You will see it at stores near you soon and that will create issues later when the waiver is rescinded and states start to check tanks again." – Stansberry Alliance member Lance F.
Corey McLaughlin comment: Thanks for writing in. We love to hear from folks like you on the ground to share what all these decisions look like in the real world.
"Please explain how any utility plans to add additional [megawatts] to existing fixed Nuclear Power plants. This sounds like throttling up existing old plants in disguise. Wink, wink." – Subscriber Stephen C.
McLaughlin comment: Yes, you're right. As we wrote yesterday, Constellation Energy's multibillion-dollar deals with Amazon and Alphabet call for upgrades to parts of existing Constellation nuclear plants – things like modernizing turbines, steam generators, and digital control systems.
The upgrades will squeeze out some more capacity/efficiency. But in the case of Amazon's deal with the Calvert Cliffs nuclear plant here in Maryland, the plans are set to add only 10% to current power-generating capacity... and not until 2030 at the earliest.
The added capacity is significant – about 190 megawatts, which is enough to power a couple data centers or about 150,000 homes around the clock. But upgrades like these are not a Holy Grail of energy supply either.
More power is still being demanded all over the country, and – oh yeah – the deals are happening as these hyperscalers contract 20 years of power needs from these same plants (becoming capital-intensive businesses themselves, as we keep noting).
"I was clearing out some old magazines and the cover of this fifteen-year-old Economist magazine caught my eye.
"You could write the same article today but the numbers have soared. Keep up the good work." – Stansberry Alliance member Noel F.
McLaughlin comment: That is true about being able to write the same article today, and we just did it in Monday's issue.
Also, the baby on that cover is now about to finish high school. Whether he knows it or not, he's feeling the effects of all that debt. My tip for him: Earn income from value you create (from a skill or business), live beneath your means, and begin saving, investing, and compounding ASAP.
"Hi! Please tell Debbie J that this 'liberal' (slightly left of center) dude agrees with her that we should return to sound money practices. Ever since after Leon Panetta & the Clinton Administration I've wished for that.
"But despite the platitudes, neither party has shown an inclination to actually act toward such a worthy goal. Yours for fiscal sanity." – Subscriber Chuck W.
All the best,
Nick Koziol
Baltimore, Maryland
October 7, 2026