28 September 2026 | Latest available: Weekly Market Update, September 22

Citi’s latest weekly update argues that global economies are proving resilient enough to absorb higher interest rates. The Fed, Bank of Japan and ECB have all moved toward tighter policy, while Citi maintains a constructive stance on risk assets despite the higher-rate environment.

One of the report’s most important figures is the scale of hyperscaler borrowing. The largest cloud and technology companies have issued more than $250bn of debt this year, already more than twice their total issuance in all of 2025. Yet Citi argues that leverage remains manageable because profitability is exceptionally strong: among the ten largest S&P 500 companies, gross margins have risen from 47% in 1995 to 58% today, while EBITDA margins have increased from 21% to nearly 40%.

Citi also notes that 9 of 11 S&P 500 sectors are showing above-trend earnings growth, challenging the idea that current market strength is purely an AI story.

For dealmakers, the message is significant: debt issuance is rising sharply, but strong earnings are providing the capacity to service it.

Market implications

• Hyperscaler debt issuance: >$250bn YTD

• Gross margins at top 10 S&P companies: 58%, versus 47% in 1995

• EBITDA margins: nearly 40%, versus 21% in 1995

• 9/11 sectors show above-trend earnings growth

• Citi sees higher rates as manageable for corporates

M&A / deal flow implications

• Large technology companies retain substantial debt capacity

• AI infrastructure financing remains a major capital-market opportunity

• Higher rates may affect smaller companies more severely

• Strong corporate earnings support strategic M&A

3 key takeaways

1. Higher rates have not yet broken corporate fundamentals.

2. AI investment is driving enormous debt issuance without a comparable deterioration in leverage.

3. Earnings strength is broader than the AI-heavy headline suggests.