Oracle Cites Force Majeure | Bond Chaos Deepens | Rails Rebuild Faster Oracle sent a force-majeure notice on a Stargate data center whose loan already trades below 90 cents. The 30-year hit a 22-year high. Hedge funds are paring the basis trade. BlackRock put model portfolios on-chain.
Stocks were mixed Thursday.
The 10-year crossed 5.15%. The 30-year hit its highest level since 2004. Bond volatility spiked sharply. The MOVE index surged to its highest close since early April. WTI climbed above $94. Trump and Xi met at the White House. A trade truce was extended to mid-January.
Underneath all of it, one filing changed the picture. Oracle sent a force-majeure notice on a marquee Stargate site in New Mexico. The loan behind it already trades below 90 cents. The debt the AI build runs on just announced itself in a single document.
Three more stories sit alongside it. The bond market is showing signs of forced selling. Banks face deposit outflows from the same boom lending to their borrowers. And BlackRock put model portfolios on a blockchain while a data center stalled on a permit.
PMD LENS
This morning asked who can see the debt under the AI build. This afternoon, one piece surfaced. A force-majeure notice is not a default. But it is a tenant building optionality in a project whose loan already trades at stressed levels. Both sides say nothing has changed. The loan price says something else.
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- The MOVE index surged from 78 to 95 on Wednesday, its highest close since April. Bond volatility at this level is a typical driver of wider corporate spreads.
- Mortgage rates crossed back above 7% per Freddie Mac. The rate arc has now reached home financing again.
- Richmond Fed President Barkin said AI investments are beginning to pinch supply chains in ways that raise consumer prices. A third Fed official named the AI demand channel in four days.
- MGM Resorts (MGM) fell more than 11% after Barry Diller withdrew his acquisition bid.
Oracle Filed Force Majeure on a Stargate Site. The Loan Behind It Already Trades Stressed.
Oracle (ORCL) sent a force-majeure notice to Blue Owl's (OWL) development unit behind Project Jupiter, a 2.45-gigawatt AI campus in New Mexico and one of five US sites in the Stargate program. Oracle is not trying to exit the project. It wants to defer payments if the campus misses its planned 2028 start.
Both sides said nothing has changed. Oracle said the project remains on schedule. Blue Owl said the notice does not change the financial commitments. The loan disagrees with both of them. The $18 billion in bank debt funding the project already trades below 90 cents on the dollar. A gauge of Oracle's credit risk hit a record today. Oracle shares fell and are down roughly 30% this year. Last quarter, Oracle's free cash flow turned negative.
The project has hit real obstacles. It was denied a key energy permit. The gas pipeline meant to fuel it slipped nearly six months to a February start after repeated state permit denials. Local opposition is growing before the midterms. Texas halted data-center permits this week, covering roughly a fifth of the national pipeline.
Force majeure in a data-center contract is not boilerplate anymore. It is a risk-allocation tool that can decide whether a delay stays isolated or spreads through construction, customer, power, and financing documents. Data-center leases often let tenants exit if service does not start on time. Oracle is not walking away. It is making sure it does not have to stay if things go wrong.
What the Loan Price Is Saying
A stressed bank loan is the market's read on the project, not the parties' statements. When the $18 billion behind a marquee Stargate site trades below 90 cents, the stress is already priced. The question is whether it goes further.
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SIGNAL 1: The Bond Selloff Has Signs of Forced Selling. The Buyers Are Stepping Back.
The 10-year crossed 5.15%, and the 30-year touched 5.44%, its highest since 2004. Bond volatility spiked sharply. Strategists say the move has the hallmarks of a pain trade and forced position unwinds rather than purely fundamental selling. Many traders had been running steepener bets that the gap between short and long yields would widen. Instead the gap narrowed sharply and the positions got washed out.
The leverage under the Treasury market is also thinner. Hedge funds have pared the basis trade by roughly 20% this year to an estimated $1.2 trillion. Asset managers have cut their net longs in 2-year futures by more than 30% from a March record. The buyers and the leverage that absorbed Treasury supply are both pulling back at the moment the build needs to borrow trillions more.
When Volatility Rises, Spreads Follow
The MOVE index at 93 after spiking to 95 is still below 2022 levels. But it is moving in a direction that typically precedes wider corporate bond spreads. JPMorgan flagged the risk of slowing ETF inflows if rate and equity volatility keeps climbing. If corporate spreads widen from here, the AI buildout's own financing costs go with them.
SIGNAL 2: Meta's Muse Is Making Deposit Flight Easier. The Build's Lenders Face a Restless Funding Base.
The KBW Bank index fell nearly 3% this week while Meta (META) rose more than 14%. Charles Schwab (SCHW) and LPL Financial each fell more than 6% on Tuesday alone.
The concern is deposits. Banks and brokers earn a spread on idle customer cash. An AI agent that moves cash to the highest yield automatically removes that inertia.
The AI boom compounds the problem. Its bond issuance and loan growth raise demand for savings and lift the equilibrium rate banks must pay to keep deposits.
The savings rate has already fallen to 2.6%, near a post-pandemic low. The build leans on about 20 banks including the ones that wrote Jupiter's $18 billion loan. The same boom is making those lenders' cheapest funding harder to hold.
The Irony Running Through the Banking Sector
The AI buildout needs the banks. The AI agents are making it easier for depositors to leave the banks. Both of those things are happening at the same time, in the same sector, funded by the same boom.
SIGNAL 3: BlackRock Put Model Portfolios On-Chain. The Financial Rails Are Moving at Software Speed.
BlackRock (BLK) built three model portfolios that launched as blockchain tokens. They hold mixes of stock, bond, and bitcoin ETFs. Token holders can trade them around the clock and borrow against them. The SEC cleared tokenized stocks under five-year exemptions this month. For now the portfolios are open only to non-US investors and do not carry full shareholder rights.
New York's attorney general sued Polymarket the same day, calling it illegal gambling. Similar cases are running against Kalshi and units of Coinbase and Gemini. Federal courts are split on who regulates the space.
The split that matters is the physical versus the financial. Oracle's data center stalled on a permit denial and a pipeline delay. BlackRock's portfolios went live on a blockchain in an afternoon. The physical build moves at the speed of land, permits, and local politics. The financial layer moves at the speed of software. The two are no longer keeping pace with each other.
Where the Legal Ground Sits
Tokenization is accelerating and the regulatory framework is contested. New York suing Polymarket while the SEC issues exemptions in the same week is the unresolved legal picture the new rails are being built on.
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Trump-Xi summit continues with AI, rare earths, Iran, and trade all on the table. The trade truce was extended to mid-January. Watch whether any AI or Hormuz language comes out of Thursday's bilateral. October hike odds sit at 73%. The next CPI in mid-October carries the fuel and supply-chain costs Barkin named as the reason the last hike happened. Watch Jupiter's loan price over the next 60 days and whether other Stargate sites see similar notices.
Oracle and Blue Owl say Jupiter is fine; the loan trades below 90 cents. The bond desks blame the deficit; the 30-year at a 2004 high says the buyers are leaving. Banks say deposits are sticky; the boom funding their borrowers is making that cash easy to move. The financial rails rebuild in an afternoon; the physical ones wait months on a permit. In every one, the price moved before the words did, and every gap is wider tonight than this morning.
This morning asked who can see the debt under the AI build. Thursday, one piece of it surfaced in a force-majeure filing and a loan trading below par.
Watch whether other hyperscalers send similar notices on delayed sites. Watch whether the Jupiter loan slides further below 90 cents. Watch whether the February pipeline date holds. The bond market is in a less orderly phase than it was a week ago and the forced selling is not finished. The next question is not who holds the debt. It is who holds it when the delay arrives and the notice turns into something else.
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