Interest Rates

Wall Street had a volatile week due to Nvidia’s earnings and a strong jobs report. While the “Magnificent Seven” declined, Alphabet showed strength due to its AI model Gemini 3. Eli Lilly’s $1 trillion valuation highlighted diversification beyond tech. NY Fed President Williams hinted at potential interest rate adjustments. Japanese concerts in China were abruptly canceled amid escalating tensions. Investors should focus on diversification across sectors.

The Nasdaq fell 0.84% due to tech stock declines, including Apple, Meta, and Oracle. Investors are wary of tech valuations and capital expenditure, particularly for Nvidia, despite strong future order claims. Analysts are closely watching Nvidia’s upcoming earnings call. While some see potential for a year-end rally driven by rate adjustments and macro data, Bitcoin’s weakness is a concern. Other news includes India’s energy deal with the US and Fed officials’ divided views on interest rate cuts.

U.S. markets experienced their worst day since October 10th, with the Dow, S&P 500, and Nasdaq all significantly declining. This downturn was driven by cooling AI sentiment, concerns about interest rate policies, and Oracle’s debt-financed AI ambitions. Investors are reassessing tech valuations and the financial commitments required for AI infrastructure. Uncertainty surrounds a potential December interest rate cut by the Fed, coupled with a lack of comprehensive October economic data, further complicating market sentiment. Oracle saw a significant value drop, raising questions about its AI investment sustainability.

Ark Invest CEO Cathie Wood, at Saudi Arabia’s FII, addressed concerns about an AI bubble. While not predicting a full bubble, she anticipates a potential “reality check” for AI valuations as interest rates shift. She believes algorithm-driven trading could trigger a market correction as rates rise. Wood argues AI’s long-term potential outweighs these short-term risks, seeing enterprise AI adoption as a gradual process requiring organizational restructuring. Her view contrasts with institutions like the IMF, which have warned of a potential AI bubble.

The Hanover Insurance Group (THG) announced the pricing of a $500 million offering of 5.50% senior, unsecured notes maturing in 2035. Net proceeds will be used to retire higher-yielding debt, including the 7.625% Senior Notes due October 2025 and the 4.500% Senior Notes due April 2026, with the remainder for general corporate purposes. Goldman Sachs, J.P. Morgan, and Morgan Stanley are joint book-running managers. The offering, under an existing SEC shelf registration, aims to manage the balance sheet and potentially free up capital.

ACRES Commercial Realty Corp. announced cash dividends for its preferred stock, signaling confidence in the market. Series C shareholders will receive $0.6379156 per share, with a variable rate tied to Term SOFR, while Series D shareholders will receive $0.4921875 per share. Both dividends are payable July 30, 2025, to shareholders of record as of July 1, 2025. ACRES focuses on commercial real estate lending and investment.

Major Chinese banks ICBC, CCB, and CMB implemented their first 2025 deposit rate cuts, reducing short-term rates (e.g., 3-month to 0.65%, 1-year to 0.95%) and steepening the yield curve inversion with 5-year rates dropping to 1.30%. The coordinated cuts, shrinking 3-year and 5-year deposit returns by 25-32%, reflect deliberate financial repression to dismantle China’s savings culture. While aiming to spur consumption through eroded real returns, analysts question whether decades-old thrift habits can be overturned amid tightened alternative investment options.