Last week, the S&P 500 and Nasdaq 100 reached record highs on AI optimism, despite elevated US Treasury yields. However, this early-week rally was driven by a narrowing concentration of large technology companies. The S&P 500 information technology sector ultimately closed mostly unchanged after a late-week rotation into defensive sectors helped consumer staples and utilities lead the index. Meanwhile, the TSX Composite was lifted by the technology, consumer discretionary, and energy sectors.

Shares of Cenovus Energy fell 3% after it agreed to acquire Athabasca Oil in a $5.7 billion cash-and-stock deal, sending Athabasca shares surging 13.5%. The acquisition adds about 45,000 barrels of oil equivalent per day to Cenovus’s production, with the CEO noting plans to advance development projects to reach 115,000 barrels per day from the assets by 2032. Cenovus's stock dipped after investors deemed the premium paid for the assets too expensive. Ultimately, the deal underscores a renewed growth optimism in the Canadian oil sands sector spurred by recent government pledges to fast-track crude export pipelines.

Last week, SpaceX announced it agreed to purchase spectrum licenses in the US in an effort to supplement its Starlink wireless service offering. Communication companies worldwide purchase spectrum to not only accommodate growth, but to provide improved services. This purchase will pave the way for SpaceX to compete with mobile carriers and drive share prices of mobile companies down not only in North America, but in Europe as well. The move has spurred disruption concerns across the industry. Shares of BCE, Rogers and Telus declined 5.5%, 3.7% and 3.5% respectively over concerns that more wireless competition could squeeze margins further.   

Schneider Electric agreed to acquire US software firm PTC for US$22.6 billion to strengthen its data centre backbone and industrial AI capabilities. PTC shares surged 33.5% on the US$205 per share offer, which was a massive 42.3% premium above its prior close. This acquisition would boost Schneider’s recurring software revenue to roughly 24% of total sales. Schneider shares tumbled 10% following the announcement. Investors were concerned about the deal's sheer size, the steep premium, the heavy debt and equity financing required, and broader software valuation headwinds tied to AI disruption fears.

Shares of Canadian fashion retailer Aritzia climbed 20.5% after raising its full-year outlook and reporting a 44% surge in second-quarter revenue to $1.2 billion. Performance was driven by strong fall apparel demand and an accelerating US expansion that generated nearly $780 million as new store openings took hold. These results highlight resilient consumer spending on specific fashion brands, even amid persistent high cost-of-living strains.

Last week, the yield spread between 10-year French government bonds (OATs) over German government bonds (Bunds) closed at levels last seen during the 2011-2012 Eurozone debt crisis era, long-term US Treasury auctions exhibited strong demand amidst multi-decade high yields, and SpaceX reportedly held early discussions to raise US$40 billion to purchase Nvidia chips and expand its computing and AI infrastructure.

The US$39 billion 10-year US Treasury auction stopped at a yield of 5.3%, drawing demand from pension funds, insurance companies, asset managers, foreign central banks, and sovereign wealth funds. However, strong auction participation alone does not guarantee yields have peaked. While these elevated long-term yields present an opportunity for fixed-income investors, it is equally important to understand the risks and diverse drivers behind these moves—from geopolitical tensions and oil price volatility to broader inflation expectations and concerns regarding fiscal sustainability. 

The 10-year OAT-Bund spread—the extra yield France pays over risk-free German debt—closed the week at roughly 138 basis points, as bond investors required a higher return on French sovereign debt in compensation for fiscal deterioration, expanding budget deficits, and political uncertainty ahead of 2027 elections. German Bunds widely serve as the euro area's baseline sovereign risk-free benchmark, owing to their AAA credit rating and deep market liquidity. Many European Central Bank (ECB) officials attributed the widening OAT-Bund spread to fiscal and political issues rather than a monetary transmission failure—largely ruling out immediate ECB intervention. 

According to Bloomberg, SpaceX is in early-stage discussions to raise a US$40 billion debt financing package—comprising US$30 billion in investment-grade debt and US$10 billion in bank loans—with proceeds intended to fund Nvidia AI chips. Given the sheer size of the potential deal, which tests the capacity of public debt markets to absorb new supply, the announcement drew scrutiny from credit markets. SpaceX’s five-year credit default swap (CDS)—a financial derivative that functions as insurance against default—hit a fresh record high of 197 basis points, surging 16 basis points on the news. This potential transaction follows SpaceX’s US$25 billion debt offering in June and is part of a broader wave of massive debt issuances to fund AI infrastructure this year. Notably, semiconductor and AI infrastructure software supplier Broadcom was also reported by Bloomberg to be in early-stage discussions to raise over US$50 billion to help OpenAI purchase custom AI chips.