Three important developments emerged Friday that could significantly influence the US economy and financial markets in 2027.
First, US bank credit growth accelerated sharply in October. The Federal Reserve’s latest H.8 report shows that total bank credit expanded at a 7.3% annualized rate, while commercial and industrial loans grew at a 13.7% rate. Credit creation remains an important source of economic support despite higher interest rates.
Second, US producer-price inflation reached 6.5% year over year, its highest rate in nearly four years. Treasury yields rose further, with the ten-year yield ending the week around 5.14%. Higher financing costs are becoming an increasingly important challenge for heavily indebted businesses.
Third, Nscale disclosed that it expects a $1.7 billion net loss on just $307.5 million in revenue during the first nine months of 2026. The Nvidia-backed AI infrastructure company also warned that it needs additional financing to meet its investment commitments.
Meanwhile, the International Energy Agency reported that global oil supply has exceeded demand for the first time since the Iran war began. However, diesel supplies remain exceptionally tight.
The central question is whether continued credit expansion and enormous AI-related investment can sustain economic growth as inflation and interest rates remain elevated.
Table of Contents
- US Bank Credit Growth Accelerates
- Producer-Price Inflation Reaches 6.5%
- Treasury Yields Record Their Worst Week in 18 Months
- Nscale Warns That It Needs More Financing
- Nvidia’s Leadership Crisis Pressures AI Stocks
- Applied Materials Reports 53% Revenue Growth
- S&P 500 Consensus Earnings Growth
- IEA Reports Global Oil Supply Has Returned to Surplus
- US GDP Outlook Remains Strong
- China, APEC and US Trade Policy
- US Politics, Defense Spending and Geopolitical Risk
- Other Significant Corporate Earnings
- What to Watch Next
- Macro Watch Bottom Line
1. US Bank Credit Growth Accelerates
The Federal Reserve released its latest H.8 banking data Friday afternoon.
The figures show a substantial acceleration in bank credit growth during October.
US Bank Credit — Monthly Growth at Annualized Rates
| Category | September 2026 | October 2026 |
|---|---|---|
| Total bank credit | 3.4% | 7.3% |
| Loans and leases | 7.4% | 9.4% |
| Commercial and industrial loans | 10.1% | 13.7% |
| Real estate loans | 3.3% | 2.7% |
The strongest growth occurred in business lending.
Commercial and industrial loans increased at a 13.7% annualized rate in October, following 10.1% in September. Total loans and leases grew at a 9.4% rate.
Real estate lending, by contrast, grew at only 2.7%.
These are monthly changes expressed at annualized rates, not year-over-year growth rates.
The Latest Weekly Figures
The H.8 report also provides balance-sheet data through November 4.
| Indicator | November 4 Level | Weekly Change |
|---|---|---|
| Total bank credit | $20.083 trillion | +$58.0 billion |
| Loans and leases | $14.235 trillion | +$14.8 billion |
| Commercial and industrial loans | $2.997 trillion | −$0.6 billion |
| Securities holdings | $5.849 trillion | +$43.3 billion |
| Deposits | $19.862 trillion | +$56.5 billion |
Why This Matters
Credit growth is one of the most important drivers of economic activity.
When banks expand their lending, they help finance business investment, household spending and asset purchases.
The latest data suggest that the banking system is continuing to provide substantial financing to the economy despite the Federal Reserve’s restrictive monetary policy.
This is particularly interesting given the weakness in the housing market.
Existing-home sales have fallen to their lowest level since 2010, yet business lending is growing rapidly.
The economy is therefore experiencing a significant divergence between credit-sensitive housing activity and business borrowing.
The Creditism Perspective
Under the Creditism framework, the growth of credit is a central determinant of economic expansion.
October’s acceleration in bank lending suggests that credit creation remains an important support for business activity.
However, the composition of that lending matters.
Some borrowing finances productive investment. Other borrowing may support asset purchases, refinancing or financial transactions.
Consequently, rapid credit growth does not necessarily translate into equally rapid GDP growth.
Nevertheless, the acceleration in business lending is an encouraging sign for the near-term economic outlook.
2. Producer-Price Inflation Reaches 6.5%
The Bureau of Labor Statistics reported Friday that the Producer Price Index for final demand increased 0.3% in October, slightly below the consensus forecast of 0.4%.
However, the year-over-year increase reached 6.5%, the largest since November 2022.
October Producer Price Index
| Indicator | October Change |
|---|---|
| Headline PPI, monthly | +0.3% |
| Headline PPI, yearly | +6.5% |
| Final-demand goods, monthly | +0.5% |
| Final-demand services, monthly | +0.2% |
| PPI excluding food, energy and trade services, monthly | +0.5% |
| Same underlying measure, yearly | +4.9% |
The details suggest that inflationary pressure remains broad.
Goods prices increased 0.5%, including a 1.3% rise in food prices.
Services prices rose more moderately, but the measure excluding food, energy and trade services increased 0.5% for the second consecutive month.
Why the Annual Increase Matters
The 6.5% annual increase is particularly concerning because producer-price inflation can eventually influence consumer prices.
Businesses facing higher input costs may attempt to pass those increases on to customers. Alternatively, they may absorb the costs through lower profit margins.
Neither outcome is particularly favorable for financial markets.
Higher consumer prices can force the Federal Reserve to maintain restrictive monetary policy. Lower corporate margins can weaken earnings growth.
Implications for the Federal Reserve
Friday’s slightly softer-than-expected monthly reading provided little relief to the Treasury market.
Investors remain convinced that the Federal Reserve will raise interest rates in December.
The combination of elevated consumer inflation, producer-price inflation and resilient credit growth strengthens the case for further tightening.
The important question is whether additional interest-rate increases will slow inflation before they significantly damage economic growth.
3. Treasury Yields Record Their Worst Week in 18 Months
The US Treasury market suffered a substantial selloff during the week.
The ten-year Treasury yield increased approximately 28 basis points over the week, ending Friday near 5.14%.
The two-year yield increased approximately 33 basis points to 4.85%.
| Treasury Yield | Friday Level | Weekly Change |
|---|---|---|
| 10-year | 5.14% | +28 basis points |
| 2-year | 4.85% | +33 basis points |
The selloff was the largest weekly decline in Treasury prices since the market turmoil surrounding President Trump’s April 2025 tariff announcements.
Financial-Market Implications
Higher Treasury yields affect the economy through several channels.
Mortgage rates tend to increase, reducing housing affordability.
Corporate borrowing costs rise, making investment more expensive.
Higher government bond yields also increase the returns investors demand from equities.
These effects are especially important for companies undertaking large capital expenditure programs.
The AI Financing Connection
Many specialized AI infrastructure companies rely on external financing.
Their investment plans assume that they can continue obtaining debt and equity capital on acceptable terms.
A sustained increase in borrowing costs could weaken the economics of some projects.
Companies with substantial internally generated cash flow are better positioned to withstand these conditions.
The financial distinction between cash-rich hyperscalers and highly leveraged specialized infrastructure providers is becoming increasingly important.
4. Nscale Warns That It Needs More Financing
One of Friday’s most revealing developments came from Nscale.
The Nvidia-backed cloud infrastructure provider amended its IPO filing, providing new information about its financial position.
Nscale — First Nine Months of 2026
| Indicator | 9M 2025 | 9M 2026 | YoY Change |
|---|---|---|---|
| Revenue | $21.3 million | $307.5 million | +1,344% |
| Net loss | $433.3 million | Approximately $1.7 billion | Loss increased approximately 292% |
| Total debt at September 30 | — | Approximately $5.5 billion | — |
The financial figures are preliminary and unaudited.
Revenue increased more than fourteenfold.
However, the company’s losses also expanded dramatically.
Its net loss was more than five times its revenue during the first nine months.
The Financing Problem
Nscale has warned investors that it needs additional capital to meet its growing commitments for 2027.
The company has reportedly entered into substantial equipment-purchasing obligations associated with its $45 billion Anthropic contract.
However, financing for the first facility in West Virginia has not yet been secured.
Nscale has also experienced delays and changes involving Microsoft-related projects.
The company is reportedly considering whether to postpone its planned New York IPO.
Why This Is Important
Nscale’s experience illustrates a fundamental challenge facing the AI infrastructure industry.
Customers may commit to purchasing enormous amounts of computing capacity in the future.
But infrastructure providers must finance the construction of data centers and purchase expensive processors before they can deliver those services.
The financing requirements can be enormous relative to current revenue.
If capital markets become less willing to finance these companies, projects could be delayed even when customer demand remains strong.
The Broader AI Investment Cycle
Nscale joins CoreWeave and Nebius in demonstrating the financial complexity of the AI infrastructure boom.
These companies have extraordinary growth opportunities.
But they also face large capital requirements, substantial debt obligations and execution risks.
The most important question is not whether demand for AI computing is growing. It is whether that demand can be converted into sufficient cash flow to support the enormous investments required to supply it.
5. Nvidia’s Leadership Crisis Pressures AI Stocks
US technology shares declined again Friday as investors continued assessing the consequences of Jensen Huang’s resignation.
Nvidia fell approximately 2%, extending its recent losing streak.
Reports also suggested that Nvidia’s board was considering Arm CEO Rene Haas as a potential successor.
No permanent appointment had been confirmed.
US Stock Market — November 13 Close
| Index | Closing Level | Daily Change |
|---|---|---|
| S&P 500 | 7,561.67 | −0.40% |
| Nasdaq Composite | 25,136.27 | −0.91% |
| Dow Jones Industrial Average | 52,347.55 | +0.10% |
| Russell 2000 | 2,790.49 | −0.31% |
Despite Friday’s declines, all four indexes recorded gains for the week.
The S&P 500 advanced 2.5%, while the Nasdaq gained 2.3%.
The Financing Relationships Under Scrutiny
Investors are increasingly examining Nvidia’s financial relationships with AI infrastructure providers.
Nvidia has invested in or provided financing to several companies purchasing its processors.
Such arrangements can help customers expand their computing capacity.
However, they also create financial relationships between equipment suppliers and customers.
If Nvidia’s new management changes its financing strategy, some infrastructure providers could face additional challenges.
This is particularly relevant to companies such as Nscale.
Anthropic’s IPO
Another important event is Anthropic’s anticipated IPO.
The company is seeking a valuation of approximately $1.4 trillion and could raise tens of billions of dollars.
A successful offering could provide a substantial source of financing for the AI industry.
However, it could also redirect investor capital away from existing AI-related equities.
The next few weeks could therefore be unusually important for determining investor confidence in the financial structure of the AI investment boom.
6. Applied Materials Reports 53% Revenue Growth
The contrast between specialized infrastructure providers and established semiconductor equipment manufacturers is striking.
Applied Materials reported exceptionally strong fiscal fourth-quarter results.
Applied Materials — Fiscal Q4 2026
| Indicator | Q4 FY2025 | Q4 FY2026 | YoY Change |
|---|---|---|---|
| Revenue | $6.80 billion | $10.41 billion | +53% |
| GAAP net income | $1.90 billion | $2.72 billion | +43% |
| GAAP EPS | $2.38 | $3.40 | +43% |
| Non-GAAP EPS | $2.17 | $4.16 | +92% |
The company generated $3.3 billion in operating cash flow during the quarter.
For the full fiscal year, revenue increased 21% to $34.45 billion, while GAAP net income increased 44% to approximately $10.09 billion.
Why These Results Matter
Applied Materials supplies equipment used to manufacture semiconductors.
Its results demonstrate that AI-related demand is generating substantial revenue and profits for established industrial technology suppliers.
The company benefits from investments in semiconductor manufacturing capacity.
Unlike some specialized cloud infrastructure providers, Applied Materials is already producing substantial profits and cash flow.
The AI investment boom can generate exceptional profits for equipment suppliers even while some companies purchasing that equipment struggle financially.
7. S&P 500 Consensus Earnings Growth
FactSet published its November 13 Earnings Insight report Friday.
The updated figures show continued exceptionally strong corporate earnings growth.
Latest S&P 500 Consensus Estimates
| Indicator | November 13 Estimate |
|---|---|
| Q3 2026 blended earnings growth, YoY | +31.9% |
| Q3 2026 blended revenue growth, YoY | +14.4% |
| Q4 2026 expected earnings growth, YoY | +28.3% |
| Calendar 2026 expected earnings growth, YoY | +33.3% |
| Q1 2027 expected earnings growth, YoY | +19.6% |
| Calendar 2027 expected earnings growth, YoY | +16.2% |
| Forward twelve-month P/E | 18.3 |
The third-quarter blended earnings growth rate increased from 31.4% in the previous week’s report to 31.9%.
FactSet also reported that 91% of S&P 500 companies had announced third-quarter results.
Of those companies, 84% exceeded analysts’ earnings-per-share estimates.
However, the aggregate earnings surprise was only 3.1%, below historical averages.
The Most Interesting Development
FactSet expects earnings growth to slow from 33.3% in 2026 to 16.2% in 2027.
That would still represent strong earnings growth.
However, it would be a substantial deceleration.
Meanwhile, the forward P/E ratio has increased to 18.3, compared with 17.7 in last week’s report.
Implications for Equities
Strong earnings growth can support equity prices.
But higher Treasury yields increase the returns investors demand from equities.
The market therefore faces competing forces.
Corporate earnings expectations remain exceptionally strong.
However, interest rates are rising, and investors are becoming more concerned about AI financing risks.
The interaction between earnings growth and valuation multiples could become a major determinant of equity-market performance in 2027.
8. IEA Reports Global Oil Supply Has Returned to Surplus
The International Energy Agency published its November Oil Market Report Friday.
The findings are particularly important given the war involving Iran and the disruptions to energy transportation through the Strait of Hormuz.
The IEA reported that global oil supply exceeded demand in October for the first time since the war began.
Global Oil Market — October 2026
| Indicator | Latest |
|---|---|
| Global oil supply | 105.4 million barrels/day |
| Monthly increase in supply | +2.3 million barrels/day |
| Global inventory increase | +52 million barrels |
| 2026 demand forecast change | −2.7 million barrels/day YoY |
| 2027 demand forecast change | +2.0 million barrels/day YoY |
Why Supply Has Recovered
Oil exports from the Persian Gulf have increased substantially.
The IEA reported that Gulf exports reached approximately 18.4 million barrels per day in October.
That was still 26% below prewar levels, but represented a significant recovery.
The agency now expects the oil market to move into surplus during the fourth quarter.
But Diesel Remains Extremely Expensive
Despite the recovery in crude oil supplies, diesel markets remain exceptionally tight.
The IEA reported that European diesel prices remained near $180 per barrel, approximately 77% above prewar levels.
This matters because diesel is used extensively in transportation, construction, agriculture and industrial production.
Consequently, lower crude oil prices may not immediately translate into equally large reductions in business operating costs.
Oil Prices — Friday Settlement
| Benchmark | Price | Daily Change |
|---|---|---|
| Brent crude | $95.84/barrel | +0.02% |
| WTI crude | $88.56/barrel | −0.20% |
Both benchmarks declined approximately 2.5% over the week.
The IEA’s report suggests that the immediate risk of a severe crude oil shortage has diminished, but disruptions to refined products and shipping remain important inflation risks.
9. US GDP Outlook Remains Strong
The latest Atlanta Fed GDPNow estimate provides an encouraging assessment of economic growth.
The model currently estimates that real GDP will increase at a 3.5% annualized rate in the fourth quarter of 2026.
The estimate was last updated November 9.
It is a model-based nowcast, not an official Federal Reserve forecast.
The next GDPNow update is scheduled for November 17.
What Is Supporting Growth?
Several factors appear to be supporting the economy.
Business investment remains strong, particularly in technology-related equipment and infrastructure.
Bank lending accelerated in October.
The labor market remains relatively resilient.
And corporate earnings growth continues exceeding expectations.
What Could Slow Growth?
Housing activity is weak.
Higher Treasury yields are increasing financing costs.
Oil prices remain elevated despite recent declines.
And the Federal Reserve appears likely to raise interest rates further.
The Important Distinction
The latest GDPNow estimate suggests that economic growth remains strong.
However, the composition of growth is increasingly important.
An economy supported by extraordinary capital expenditure in one sector may be more vulnerable to changes in financing conditions than an economy experiencing broad-based expansion.
The sustainability of AI-related investment could therefore become increasingly important to the US GDP outlook in 2027.
10. China, APEC and US Trade Policy
Attention is turning toward next week’s APEC summit in Shenzhen.
President Trump and President Xi are expected to attend, along with other major regional leaders.
The meeting could provide an opportunity to discuss tariffs, semiconductor export restrictions and broader US-China economic relations.
The Trade Imbalance
China recently reported a merchandise trade surplus of approximately $1.04 trillion during the first ten months of 2026.
Strong exports of technology products have helped support growth despite weak domestic demand.
However, the enormous surplus creates political tensions with trading partners.
The United States and European Union are concerned about competition from Chinese manufacturers.
Semiconductor Restrictions
Nvidia’s leadership transition has intensified congressional scrutiny of advanced semiconductor exports to China.
New restrictions could affect American technology companies’ access to Chinese customers.
They could also encourage China to accelerate investment in domestic semiconductor production.
US Trade Relations with North America
Treasury Secretary Scott Bessent expressed optimism Friday about reaching trade arrangements with Canada and Mexico.
These negotiations matter because North American manufacturing supply chains are highly integrated, particularly in automobiles, machinery and electronics.
The combination of trade negotiations and semiconductor export restrictions could significantly influence the international distribution of AI-related investment.
11. US Politics, Defense Spending and Geopolitical Risk
The political consequences of the midterm elections continue to develop.
Democrats will control both chambers of Congress beginning in January, increasing the likelihood of greater oversight of the Trump administration.
AI Regulation and Cybersecurity
The incoming Congress is expected to place greater emphasis on cybersecurity and AI regulation.
Potential legislation could address advanced AI systems, cyberattacks and federal cybersecurity capabilities.
For the technology industry, regulatory changes could influence development costs, data center investment and the deployment of new AI applications.
Defense Spending
The administration’s proposed $1.5 trillion fiscal 2027 defense budget remains subject to congressional approval.
The final spending level will depend on negotiations over military priorities, procurement and fiscal policy.
A distinction must be maintained between proposed budgets and enacted appropriations.
For defense contractors, actual funded contracts are more important than headline spending proposals.
Ukraine
Russia indicated Friday that European governments could participate in negotiations concerning Ukraine if they demonstrated a willingness to contribute constructively.
However, substantial disagreements remain over the terms of a potential settlement.
Continued military operations are supporting demand for air defense systems, drones, missiles and other military equipment.
European governments are also increasingly concerned about protecting energy and transportation infrastructure.
Iran
Although the IEA reports that oil supply conditions have improved, the conflict involving Iran remains unresolved.
Attacks on tankers and energy infrastructure continue threatening international shipping.
Geopolitical risks remain important because they can affect inflation, government spending, industrial investment and global financial conditions simultaneously.
12. Other Significant Corporate Earnings
Richemont: Luxury Spending Remains Strong
Swiss luxury group Richemont reported strong results Friday.
Richemont — Six Months Ended September 30
| Indicator | H1 FY2026 | H1 FY2027 | YoY Change |
|---|---|---|---|
| Revenue | €10.62 billion | €12.28 billion | +16% |
| Net profit | €1.81 billion | €2.53 billion | +39% |
| Operating profit | €2.36 billion | €3.13 billion | +33% |
Jewellery sales were particularly strong.
However, mainland Chinese demand remained relatively subdued.
The results suggest that spending by wealthy consumers remains resilient even as broader household consumption faces pressure from inflation and economic uncertainty.
The Broader Earnings Picture
The contrast between Applied Materials, Richemont and Nscale is striking.
Applied Materials is generating record profits from semiconductor equipment demand.
Richemont is benefiting from strong luxury spending.
Nscale is experiencing extraordinary revenue growth but also enormous losses and financing requirements.
The economy is producing exceptional corporate earnings in some industries while other rapidly growing companies remain heavily dependent on external capital.
13. What to Watch Next
| Date | Event | Why It Matters |
|---|---|---|
| November 17 | Nvidia earnings | Leadership transition, AI demand and financing relationships |
| November 17 | US import/export price indexes | Trade costs and inflation |
| November 17 | Atlanta Fed GDPNow update | Q4 economic growth |
| November 17–23 | APEC summit period | US-China trade and geopolitical relations |
| November 25 | Updated Q3 US GDP | Investment and growth composition |
| December 8–9 | Federal Reserve FOMC meeting | Further interest-rate tightening |
| December 17–18 | Bank of Japan meeting | Japanese rates and global capital flows |
14. Macro Watch Bottom Line
Friday’s most important development was the acceleration in US bank credit growth.
The Federal Reserve’s latest figures show that bank credit expanded at a 7.3% annualized rate in October, with commercial and industrial lending growing at a 13.7% rate.
That suggests credit creation remains an important support for economic activity.
However, producer-price inflation has reached 6.5%, and the ten-year Treasury yield has climbed above 5.1%.
The economy therefore faces a difficult combination of strong credit growth and rising borrowing costs.
The implications for AI investment are particularly important.
Nscale’s latest financial disclosures illustrate how quickly revenue can expand without generating sufficient profits to finance enormous infrastructure commitments.
The company expects a $1.7 billion net loss during the first nine months of 2026 and needs additional capital to meet its obligations.
Meanwhile, Applied Materials reported 53% revenue growth and a 43% increase in net income.
These results demonstrate that the AI investment boom is creating very different financial outcomes for different participants.
Equipment manufacturers are already generating substantial profits.
Some infrastructure providers are still struggling to finance the facilities required to deliver their contracted services.
The distinction matters for financial markets.
If interest rates remain elevated, companies dependent on external financing could face increasing pressure.
However, established technology suppliers and cash-rich hyperscalers may continue expanding investment from internally generated funds.
The global energy outlook also remains complicated.
The IEA reports that crude oil supply has returned to surplus, but diesel supplies remain tight and geopolitical risks persist.
That could limit the extent to which lower crude oil prices reduce inflation.
Finally, S&P 500 earnings expectations remain exceptionally strong.
FactSet now expects earnings growth of 33.3% in 2026 and 16.2% in 2027.
These estimates provide an encouraging outlook for corporate profitability.
But the sustainability of those earnings will depend partly on whether economic growth remains strong enough to offset higher borrowing costs.
The central question for 2027 is whether continued credit creation and extraordinary AI-related capital expenditure can sustain economic growth without generating additional inflationary pressures that force interest rates even higher.
The answer will have important implications for corporate earnings, financial markets, credit conditions and the global economy.