Oracle's credit default swaps just beat their 2008 peak
The setup: record tech CDS, a near-certain Wednesday hike, and a 10-year yield knocking on 5%. Levels below.
The hike is Wednesday
FOMC meets Sept 15-16. After Thursday's CPI print, markets are pricing roughly 88-90% odds of a 25bp hike. Not a cut. A hike.
August CPI: headline +0.4% m/m, 3.4% y/y. Core +0.3% against 0.2% expected, 2.4% y/y.
Here's the part worth sitting with. Wireless telephone services jumped 5.9% in a single month, a record, adding about 0.1pp to a 0.3% core print. Roughly a third of the monthly core advance came out of a category worth 1.47% of the basket.
One line item did most of the damage. The Fed is hiking on it anyway.
JPMorgan has September and December both in its forecast. Two hikes.
The bond market already moved
The 10-year closed Friday at 4.96%. Cusp of 5%. The 2-year sits at 4.63%.
Treasury has run a $1.8T deficit through the first ten months of FY2026 and is borrowing roughly $2T this year. Heavy supply, rising rates, liquidity draining out of everything else.
Traders are crowded short bonds, but prices haven't broken. Risk is getting priced into yields, not into crashes. Strong yields are available right now without the price damage. If sentiment snaps or liquidity tightens, that changes fast.
Tech's credit is screaming
Oracle's 5-year CDS hit roughly 198bps, an all-time record, edging past the ~197.8bps 2008 crisis peak. It was 144bps in January and about 40bps a year ago. S&P has them at BBB-, one notch above junk.
Not just Oracle. Nvidia's CDS set a record near 79bps. Google set one too, after posting negative free cash flow in Q2 2026 for the first time since it listed. SpaceX's 30-year debt pushed past 200bps.
Total tech CDS notional sits around $12.5B, up 500% since Q2 2025. Oracle alone accounts for $6.5B of it.
Aggregate implied default probability for the hyperscalers is near 7%, against about 4.5% for the broad investment-grade universe. Oracle by itself is over 16%.
The tell is everything else being fine
High-yield OAS sat at 270bps on Sept 10. Tight. Banks are fine. Broad investment-grade is fine.
Credit is repricing one sector and leaving the rest alone. That's not a market panic. That's the bond desk doing homework the equity desk hasn't touched yet.
The capex crack
Friday, Anthropic's Dario Amodei publicly called for slowing frontier AI development. Sam Altman and Elon Musk both backed him. Three direct rivals rarely agree on anything in public. This time they did, and it reads less like a safety warning and more like a coordination problem: everyone needs GPUs, nobody wants to blink first, and everybody keeps spending borrowed money to stay in the race.
OpenAI pushed its IPO to 2027, holding out for a $1T valuation. The exit that was supposed to validate all this spend just moved a year further out.
The real question forming: when do OpenAI, Anthropic, and xAI turn billions in spend into actual free cash flow? The market priced in a perpetual hockey stick. That story is fraying.
Flows corner
Gold sat near $4,407 on Sept 8, up about 30% over twelve months. It got hit 16% in Q2, its worst quarter since 2013, and central banks bought a record 288.9 tonnes into that drop, up 74% y/y. Poland took 51 tonnes, China 33.
Buying the decline is what reserve managers do when they're hedging something structural. Watch the buyers, not the price.
Diesel crack spreads broke $100/bbl for the first time ever this year, peaking near $102. Global refining capacity is genuinely constrained, and diesel feeds food and construction costs directly. Commodity producers are signaling inflation that breakevens aren't.
My read
Watch $SPY against $QQQ. Tech rotating down while the broad market holds is sector repricing. Broad market following tech down is contagion, and it means credit was right the whole time.
Credit is pricing something real in tech and its time to close the gap
Not financial advice. DYOR.