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12 October 2026 | Latest available: Market Pulse, 6 OctoberGoldman Sachs Asset Management estimates that US GDP growth is tracking at 3.4% in Q3, compared with 0.8% in the euro area and 4% in China. It attributes the stronger global activity backdrop partly to approximately $1 trillion in cumulative AI capital expenditure, alongside substantial government spending. At the same time, global AI-related debt issuance is approaching $600 billion year to date, with around 40% issued by high-grade hyperscalers.The financing implication is significant: AI infrastructure projects are competing with governments and other borrowers for capital. Goldman also notes that the S&amp;P 500’s forward price-to-earnings ratio has fallen to 21x, from 25x a year ago, while earnings per share growth is tracking at 36% for 2026. That combination suggests valuations have adjusted to higher rates, but rapid further increases in yields could still unsettle markets.Market implications<ul><li>AI financing: Debt issuance remains substantial as infrastructure investment expands.</li><li>Valuations: The lower forward P/E offers some cushion, but not immunity from yield volatility.</li><li>Credit: Selectivity matters as more AI-related borrowers compete for funding.</li></ul>M&amp;A / deal flow implications<ul><li>Data centres, power infrastructure and AI-related assets remain important financing and strategic investment areas.</li><li>Higher capital costs may increase the value of partnerships and joint ventures that share investment burdens.</li><li>Sponsors may face tougher underwriting for capital-intensive assets.</li></ul>3 key takeaways<ol><li>AI capex remains a major driver of economic activity and financing demand.</li><li>Nearly $600bn in AI-related debt issuance makes competition for capital increasingly relevant.</li><li>Strong earnings growth supports valuations, but rapid yield increases remain a risk.</li></ol>

Goldman Sachs — AI investment and government borrowing compete for capital

12 October 2026 | Weekly Market RecapJPMorgan Asset Management’s latest recap highlights the scale of the US fiscal challenge. The Congressional Budget Office estimates that the federal deficit reached approximately $1.993 trillion in FY2026, while total national debt has climbed above $40 trillion. The US is projected to reach its $41.1 trillion debt ceiling before the end of 2027. Rising interest costs and persistent government borrowing could keep long-term Treasury yields elevated, even if weaker economic data eventually support lower policy rates.For dealmakers, the important distinction is between businesses that can fund investment from cash flow and those dependent on debt markets. A structurally higher long-term yield raises discount rates in valuations, increases acquisition financing costs and can make leveraged transactions harder to underwrite.Market implications<ul><li>Rates: Large government borrowing needs may limit the decline in long-term yields.</li><li>Valuations: Higher discount rates can pressure long-duration growth assets.</li><li>Credit: Investors may demand stronger balance sheets and more conservative financing structures.</li></ul>M&amp;A / deal flow implications<ul><li>Cash-rich strategic buyers may retain an advantage over highly leveraged bidders.</li><li>Buyout firms may need lower entry valuations or more equity to make returns work.</li><li>Refinancing and balance-sheet advisory could become more important if debt costs remain elevated.</li></ul>3 key takeaways<ol><li>US fiscal sustainability remains a key risk for bond investors.</li><li>Higher long-term yields can persist even if growth slows.</li><li>Financing capacity—not just strategic rationale—will help determine which deals proceed.</li></ol>

JPMorgan — US debt and higher yields put financing costs in focus

12 October 2026 | Latest available: Thoughts on the Market, 9 OctoberMorgan Stanley’s Andrew Sheets has focused on whether markets can continue absorbing higher yields without a more significant deterioration in risk appetite. Speaking after the firm’s European Credit Conference, attended by 50 companies and more than 1,000 investors, Sheets highlighted the central question facing credit markets: at what point do rising rates become a problem for otherwise resilient markets?A related signal came from Morgan Stanley equity strategist Mike Wilson on 12 October. He noted that the US 10-year Treasury yield has risen approximately 120 basis points since February, tightening financial conditions even without further Federal Reserve action. The speed of the increase and bond-market volatility may matter as much as the absolute yield level.For investment banking, the risk is that higher yields eventually translate into weaker financing conditions, more conservative acquisition valuations and reduced leverage capacity. Strong equity markets may continue supporting strategic transactions, but financing-sensitive deals face a more demanding environment.Market implications<ul><li>Rates: The bond market is already tightening financial conditions.</li><li>Equities: AI-linked leaders have helped sustain market strength despite higher yields.</li><li>Credit: Watch bond volatility and financial-sector performance for signs of broader stress.</li></ul>M&amp;A / deal flow implications<ul><li>Higher debt costs can weaken leveraged-buyout economics and reduce bidding capacity.</li><li>Buyers and sellers may disagree more over valuations if financing costs rise faster than earnings.</li><li>Credit and refinancing conditions will be important indicators of whether deal activity broadens.</li></ul>3 key takeaways<ol><li>Markets have so far proved resilient to higher yields.</li><li>A roughly 120bp rise in the 10-year yield since February represents meaningful tightening.</li><li>The pace of yield increases could become a key determinant of deal financing and valuations.</li></ol>

Morgan Stanley — Rising yields test market resilience

12 October 2026 | Latest available: Market Update, 5 OctoberBank of America’s latest market commentary maintains a constructive outlook despite inflation, rising Treasury yields and geopolitical uncertainty. Its assessment is that revised economic data and resilient corporate earnings continue to support markets, even as financing conditions become more challenging.The key question for dealmakers is whether corporate earnings can keep pace with the cost of capital. If yields continue to rise, buyers may need to revise discount rates, lower acquisition bids or contribute more equity to transactions. Conversely, companies with robust cash generation and access to capital may find opportunities to acquire businesses facing tighter financing conditions.Market implications<ul><li>Growth: Resilient earnings continue to support the market outlook.</li><li>Inflation: Persistent price pressures could keep rates elevated.</li><li>Risk: Geopolitical and policy uncertainty could increase market volatility.</li></ul>M&amp;A / deal flow implications<ul><li>Strategic acquisitions may prove more resilient than deals dependent on aggressive leverage.</li><li>Valuation gaps could widen if sellers anchor to earlier financing conditions.</li><li>Corporate balance-sheet strength may create opportunities for acquisitions and divestitures.</li></ul>3 key takeaways<ol><li>Bank of America remains constructive despite a more difficult macroeconomic backdrop.</li><li>Earnings resilience is important, but higher yields remain a threat to valuations.</li><li>Financing structure and price discipline will be critical to completing transactions.</li></ol>

Bank of America — Resilient markets face inflation and policy risks

12 October 2026 | Latest available: Weekly Market Update, 29 SeptemberCiti Wealth’s latest weekly update, Following the Earnings: Where We Are Adding Equity Risk, identifies cybersecurity as a way to gain exposure to AI adoption without needing to predict which AI model or platform will ultimately dominate. As AI agents spread across businesses, Citi argues that security spending could become an unavoidable operating cost.Citi’s preceding 22 September report provides useful context for financing markets. It reported that the ten largest S&amp;P 500 companies had gross margins of 58%, up from 47% in 1995, while EBITDA margins had risen from 21% to nearly 40%. It also highlighted more than $250 billion of hyper scaler debt issuance during 2026, over twice the previous year’s total. Citi’s argument is that strong profitability supports debt servicing even as rates rise.For investment bankers, the combination of sustained AI investment and resilient earnings supports opportunities in technology, cybersecurity and infrastructure. However, Citi’s preference for higher-quality credit and shorter duration underscores the importance of borrower quality and financing terms.Market implications<ul><li>AI: Investment opportunities are broadening beyond core computing infrastructure.</li><li>Credit: Strong profitability supports borrowing capacity among large technology companies.</li><li>Rates: Smaller companies remain more exposed to tighter financial conditions.</li></ul>M&amp;A / deal flow implications<ul><li>Cybersecurity acquisitions could help companies address growing enterprise AI risks.</li><li>Large technology companies may retain the balance-sheet capacity to fund strategic transactions.</li><li>Smaller, rate-sensitive businesses could face greater pressure to sell, raise equity or restructure debt.</li></ul>3 key takeaways<ol><li>AI-related opportunities are expanding into cybersecurity and enterprise adoption.</li><li>Large technology companies’ profitability supports their debt capacity.</li><li>Borrower quality remains important as financing conditions tighten.</li></ol>

Citi — Earnings resilience supports corporate borrowing despite higher rates

<h4>The cost of capital is becoming the key dealmaking constraint</h4>The five banks’ research points to a common tension: economic growth and corporate earnings remain resilient, but debt is competing for capital and higher yields are making transactions more expensive. Goldman’s estimate of nearly $600bn in year-to-date AI-related debt issuance illustrates the scale of demand, while JPMorgan’s estimate of US federal debt above $40tn highlights the competing pressure from government borrowing.For investment banking, three developments deserve attention this week:<ol><li>M&amp;A: Cash-rich strategic buyers may have an advantage over financial sponsors whose returns depend on leverage and cheaper financing.</li><li>Financing: AI infrastructure, cybersecurity and power-related investment remain potential sources of debt, equity and advisory mandates.</li><li>Bank earnings: Q3 results begin this week. JPMorgan, Goldman Sachs and Citi report on 13 October, followed by Bank of America and Morgan Stanley on 14 October. Investors will be watching investment banking fees, trading revenue, net interest income and management commentary on deal pipelines.</li></ol>StreetBrief takeaway: The key question is no longer simply whether companies want to transact. It is whether valuations, financing costs and expected returns can be reconciled well enough for deals to proceed.