This update was written automatically with AI from market data and news wire reports, and published without review by a person.
Key Takeaways
- Alphabet (GOOGL) reported a 36% surge in R&D spending, driven by aggressive AI talent acquisition and increased depreciation from infrastructure investments.
- Anthropic expanded its partnership with Google and Broadcom (AVGO), securing multiple gigawatts of next-generation TPU capacity to power its frontier Claude models through 2027.
- Fitch Ratings warned that US fiscal pressures will persist regardless of the upcoming midterm election results, citing a federal deficit that has reached $1.99 trillion.
- Global fund managers are shifting toward Japanese Government Bonds (JGBs) as 40-year yields hit 4% for the first time, while purchases of US Treasuries by "friendly" nations have plummeted 60%.
Google and Anthropic Deepen AI Infrastructure Ties
Alphabet (GOOGL) executive Anat Ashkenazi confirmed that the company's Research and Development (R&D) spending has climbed 36%, a move necessitated by a competitive AI hiring landscape and the heavy depreciation costs of specialized hardware. The company is working directly with Anthropic on Tensor Processing Units (TPUs) and maintains a critical hardware partnership with Broadcom (AVGO) to develop this custom silicon.
Anthropic recently disclosed a massive expansion of its compute deal, aiming to bring 3.5GW of TPU capacity online starting in 2027. The AI lab’s revenue run rate has reportedly surpassed $30 billion, up from $9 billion at the end of 2025, underscoring the "unprecedented demand" for its Claude models. To fund this, Anthropic is utilizing a $60 billion chip-financing package backed by Broadcom (AVGO).
Fitch Flags Structural Risks in US Fiscal Outlook
Fitch Ratings released a somber assessment of the US economy, stating that fiscal pressures are set to remain elevated regardless of which party controls Congress after the midterms. The agency noted that the federal deficit for fiscal 2026 widened by 12% to $1.99 trillion, with net interest expenses now exceeding $1 trillion annually.
The ratings agency highlighted that the US lacks a credible medium-term fiscal adjustment plan, which continues to put downward pressure on its sovereign credit profile. Market analysts suggest that the "automatic recycling" of global capital into US Treasuries is ending, as investors seek higher yields and more stable fiscal environments elsewhere.
Investors Pivot to Japanese Debt as Yields Reset
Global fund managers are turning increasingly bullish on Japanese Government Bonds (JGBs) as the market undergoes a historic repricing. For the first time in decades, the 40-year JGB yield reached 4%, drawing interest from institutional investors who had long avoided the Japanese market due to near-zero returns.
This shift comes as traditional buyers of US debt, including Japan and South Korea, have significantly reduced their Treasury holdings. Japan, the largest foreign holder of US debt, saw its Treasury purchases drop 99% year-over-year in the first eight months of 2026. Strategists at State Street indicate that an increasingly unpredictable US policy landscape is making large structural overweights in Treasuries harder to justify.
Automated market updates written with AI from market data and news wire reports, published without human review.