Conniptions in the Treasury Market calm down. Nothing Goes to Heck in a Straight Line, says the WOLF STREET dictum, not even the Treasury Market.

By Wolf Richter for WOLF STREET.

Companies duking it out in the AI infrastructure race have been frantically front-loading their capital raises, trying to squeeze as much and as quickly as possible out of the markets, to get in front of other companies, to get in front of the mega IPOs of Anthropic and Open AI, and to get in front of the US government that has been squeezing the bond market for what it’s worth.

At some point, the debt and equity markets would have conniptions that would impose a pause on the capital raises until tempers settled down. And the companies wanted to get in front of that and load up on cash before that happens.

Markets are now having these conniptions, but these companies are chockful with cash that they have raised this year and last year and haven’t spent yet. And they can let the dust settle in the markets without new capital raises, and start spending this money on AI infrastructure. And after the market tempers settle down, they can dip in for more.

On top of this pile is Alphabet, which, after huge capital rases earlier this year and last year, had $242 billion in cash and marketable securities on its balance sheet as of June 30. In August, it raised another $29 billion in cash through bond sales in the US and Australia. On top of that comes the operating cash flow in Q3 (in Q2 = $39 billion). This would bring its cash hoard to about $300 billion, out of which it would be making its capital expenditures ($44 billion in Q2).

So even if the markets were to lock up, Alphabet could still spend enormous amounts in capital expenditures on AI infrastructure.

In other words, Alphabet far outraised its current capital requirements by front-loading capital raises, and it now sits on a huge pile of unspent cash that’s going to get spent.

Amazon is #2 with $123 billion in cash and marketable securities on its balance sheet as of June 30. In addition, it raised another $31 billion in July in the US and the UK. Plus the operating cash flow in Q3. Minus the capital expenditures.

SpaceX is #3 with $90 billion in cash and marketable securities as of September 30. Plus, it is now finalizing a $40 billion debt offering led by Apollo and Goldman Sachs. That would bring its cash hoard to $130 billion.

Because of the conniptions in the bond market, SpaceX is going to the loan market (insurance companies, pension funds, loan funds, private credit funds, etc., around the globe) and that’s taking pressure off the bond market that the government has to rely on for its $2.2 trillion a year in Treasury sales.

The table below shows the top 10 companies in the AI space in terms of their holdings of cash and marketable securities at the end of their last reported quarter; it also shows the end date of the quarter, and any amounts raised since the end of the quarter.

The table does not include non-AI companies, such as the massive $52 billion debt package by Paramount Skydance to fund the acquisition of Warner Bros. Discovery.

The table also does not show the cash levels and debt issuance of privately held companies, such as Anthropic and OpenAI.

The table just shows publicly traded companies actively engaged in the AI race. But the other debt issuance, such as by Paramount Skydance, also put pressure on the Treasury market.

Combined, the 10 companies in the table sat on $775 billion in cash at the end of their last quarter, with another $107 getting raised since then, for a total of $882 billion in cash. On top of that comes the current operating cash flow, minus the current capital expenditures. This is a freaking huge amount of cash they’re sitting on, much of which is going to get spent over the next year or two in the economy.

And by borrowing these huge amounts of money this year, companies put additional pressure on the bond market that the US government was already applying maximum pressure on with $2.2 trillion a year in Treasury sales. This massive corporate pressure on the bond market was often cited, including by Bessent, for the reason of the soaring Treasury yields this year. But now that pressure has backed off.

Balance sheet			Raised since Billion $
	Billion $	As of:
Alphabet	242.5	30-Jun	29.0	August, US & Australia
Amazon	123.0	30-Jun	30.8	July, US & UK
SpaceX	90.4	30-Sep	40.0	finalizing debt offering
Meta	83.1	30-Sep
Microsoft	76.8	30-Jun	3.9	August: Project Odyssey via QTS Realty Trust
Apple	54.7	30-Jun
Nvidia	49.7	27-Jul
Oracle	37.1	31-Aug
IBM	11.1	30-Sep
CoreWeave	6.4	30-Jun	4.0	September
Subtotal	774.7		107.7
Total			882.4

The conniptions in the Treasury market settle down.

In the Treasury market, the conniptions and pressures this year – including from corporate borrowers luring investors away from the Treasury market with higher yields – have caused yields to soar to 20-plus year highs. When yields soar, bond prices drop. The “bond bloodbath,” we called it many times.

Those conniptions are now settling down as AI-borrowers, front-loaded with cash up to the gills, have backed away temporarily from the bond market. Yields have backed off, and bond prices have risen.

But the fundamentals of the Treasury market have not changed: Too-high inflation, high nominal economic growth, and the effects of the government’s fiscal recklessness still rule it. It’s just that the pressures — the competition — from corporate AI borrowers have temporarily abated.

The 10-year Treasury yield ticked up to 5.00% on Friday, after plunging on Thursday and spending about a day below 5% for the first time since September 22. Since its closing high on October 5 of 5.31%, the 10-year yield has now backed off by 31 basis points.

On a long-term chart, these are minor ripples in an ocean of ripples and waves.

The 10-year Treasury yield has unwound in 13 trading days of rally the 31-basis-point yield rise produced by the 9-trading-day sell-off leading up to it. The yield went from 5.00% to 5.31% in 9 days and back to 5.00% in 13 days.

What was somewhat disconcerting and made a lot of people nervous was the sharp 9-day sell-off and surge of the yield to 5.31%. Wagging tongues were already predicting investors fleeing the Treasury market and buying gold, the collapse of the US Treasury debt, the US inability to pay the interest, “fiscal dominance” and QE to stave it off, or whatever.

What I don’t find disconcerting is unwinding that surge in 13 days, which caused yields to decline and bond prices to rise, and tempers to settle down. It was expected. I said on September 23 in the comments – when the 10-year yield hit 5.10% for the first time since 2007 – that “the market is going to take a breather here and back off a little. The buyers are starting to come out at those yields.” And I was promptly made fun of in the comments when the yield continued to rise.

The prediction was based on the somewhat tongue-in-cheek WOLF STREET dictum: Nothing Goes to Heck in a Straight Line. Not even the Treasury market.

But this breather didn’t set in just then; the 10-year yield would go over 5.3%, and 10-year Treasury notes would be sold at auction at 5.30% on October 7, before the breather finally kicked in.

There are many reasons for breathers, including investors seeing a buying opportunity (droplets of “blood in the streets”) and start buying massively, thereby pushing up prices and pushing down yields, thereby triggering a bout of short-covering among highly leveraged hedge funds.

In addition, there was the slowdown by AI bond offerings, which took pressure off the bond market. But that doesn’t mean a slowdown in AI spending: Companies front-loaded their cash raises and now sit on vast amounts of cash to fund capital expenditures without having to go back to the bond market for a while (see table above).

The 10-year yield has dropped by 31 basis points from the closing high on October 5 to October 23. Some examples of previous bond rallies expressed in yield declines:

• 39 basis point drop, Mar 27, 2025 to Apr 3, 2025 (5 trading days)
• 107 basis point drop, Apr 25, 2024 to Sep 16, 2024
• 121 basis point drop, Oct 23, 2023 to Dec 23, 2023
• 78 basis point drop, Mar 2, 2023 to Apr 4, 2023.

The five-year chart shows a more detail of the volatility of the 10-year Treasury yield. The current rally provides some welcome relief after the nine-month sell-off:

The 30-year Treasury yield ticked up to 5.33% on Friday, after having plunged on Thursday to 5.29%.

It has been zigzagging higher within a trading range for over four years. The black double-line connects the lows going back to July 2022. The black dotted line is the calculated trend line for the data within the time frame of the chart:

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