SUMMARY

• October 2025 exceeded expectations despite a sluggish start.
• U.S Money Center banks and AI infrastructure funding headlined the month.
• Investor demand remained robust across tenors and capital structure.
• November 2025 is expected to be a strong month driven by blockbuster deals from the AI “hyper scalers.”

MARKET COMMENTARY

As we closed out October, the final leg of 2025 lies ahead. U.S. rates ended the month quietly, with attention turning to Kansas City Fed President Schmid, who reiterated inflation concerns. Schmid was the lone dissent in favor of holding rates steady this week, aligning with Chair Powell’s broader sentiment that the Fed is likely to remain on pause.

As with the first rate cut in September 2024, long-end yields have moved higher following this  cut – though the move has been more muted and from a higher base. Recall that in 2024, the 10-year UST briefly dipped near 3.50% amid fears of economic weakness that ultimately proved unfounded. As we’ve consistently noted, a sustained lower rate environment in the U.S. requires a genuine economic slowdown.

Powell’s remarks downplayed recent employment softness, noting that the breakeven job creation rate to maintain unemployment has declined. Meanwhile, the Atlanta Fed’s GDPNow model is tracking real GDP growth in the high 3% range, and corporate earnings have come in strong. Markets remain resilient, financial conditions are loose, and fiscal deficits continue to run high – leaving little incentive to chase duration at current levels.

The recent pullback in rate cut expectations seems rational. The Fed’s move toward ending Treasury runoff and reinvesting agency MBS principal is not quantitative easing – it’s more akin to a basis trade, shifting from mortgages into Treasuries. This is a strategy we’ve long supported. Any expansion of the Fed’s balance sheet from here is likely to accommodate the natural growth of liabilities, such as currency in circulation.

Looking ahead to next week: U.S. elections take place on November 4th, with a light dose of Fed speak expected. Odds of a near-term resolution to the government shutdown remain low. On the data front, the ADP employment report is in focus, with expectations for a modest gain of +25k following last month’s -32k decline.

In the Treasury market, current yield levels aren’t particularly magical. The 4.20–4.25% range on the 10-year remains the most recent local high. With a wave of corporate issuance expected next week, Treasuries may stay under modest pressure.

U.S TREASURIES

OCTOBER: INVESTMENT GRADE CREDIT

October opened after a record-breaking $207 billion borrowed in the U.S. investment-grade primary market during September, and against the backdrop of an ongoing government shutdown. Falling borrowing costs and robust investor demand continue to incentivize corporate issuers to raise capital for refinancing, M&A, and capex. Following Oracle’s massive $18 billion 6-tranche transaction in late September – tied to its AI buildout initiative – market sentiment heading into Q4 and 2026 has centered on AI-related financing and merger activity as potential drivers of continued issuance.

Despite the optimism, syndicate desks, including AmeriVet, expected supply to normalize to seasonal Q4 averages, given typical year-end dynamics and headline risks surrounding fiscal negotiations. The early days of October were sluggish, with the primary market pausing as issuers and investors looked past the political noise in Washington and many remained in earnings blackout. Still, most desks-maintained expectations for roughly $90 billion in October supply, citing historical precedent that government shutdowns tend to have limited direct impact on high-grade issuance.

Ultimately, October did not disappoint as the U.S money Center banks – complimented by some overseas financials – and Meta’s $30 billion blockbuster AI driven offering, helped push October’s supply to ~$132 billion. This was a historic October in the high-grade primary market as this month surpassed October 2021 by $15 billion and ended on the fifth busiest week of all time with $78.9 billion seen.

Dealers are forecasting continued elevated activity next week, projecting about $55 billion of high-grade issuance. That would kick off what they predict will be a $120 billion front-loaded November. Sentiment in the high-grade market remains favorable as deal execution metrics remain on solid footing and investor demand continues to deliver across the curve.

OCTOBER 2025 TOMBSTONES

AmeriVet Securities is pleased to have participated in TD Bank’s $3.2 billion 4-part debt offering and JPMorgan Chase & Co’s $5 billion 2-part debt offering – bringing over $215 million in indications of interest – reinforcing our commitment to delivering Tier II and Tier III investor access to high-quality issuers.