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What's up in Mortgage Today (PM) - 12/12/2025

Week In Review
December 12, 2025

WTMS Blog Today = What's up in Mortgage Today (PM) - 12/12/2025 Bond markets staged a "choose your own adventure" session today following yesterday's Fed meeting. MBS prices weakened across all coupons while Treasury yields climbed higher. Chicago Fed's Goolsbee sparked fresh doubts about the timing of this week's rate cut. There's a noticeable divergence between short and long-term bonds since the Fed announcement. Two-year yields remained virtually flat while 10-year yields jumped nearly 4 basis points higher. This curve steepening forces mortgage-backed securities to absorb more selling pressure on down days. Fed officials continue to second-guess Wednesday's rate cut decision. Goolsbee stated there was little evidence the labor market was deteriorating fast enough to warrant the reduction. If next week's jobs report shows strength, markets will increasingly view the Fed's move as premature. Mortgage rates could see modest improvements in 2026 according to industry forecasters. Major analysts predict 30-year fixed rates will hover around 6% next year - lower than 2025's 6.6% average but far from the sub-3% rates of 2021. This would extend the gradual drift lower without materially improving affordability for most buyers. Foreclosure activity continues rising with November marking the ninth consecutive month of year-over-year increases. ATTOM reported 35,651 properties with foreclosure filings including default notices and scheduled auctions. Foreclosure starts jumped 17% compared to last November while completed foreclosures rose 26%. Baltimore and Philadelphia face growing investor scrutiny over non-owner occupied loans. Over the past three years, businesses connected to Benjamin Eidlisz purchased more than 700 Baltimore houses with 70% now in foreclosure. This pattern has private lenders either pricing themselves out of or completely ceasing operations in these markets. Locking vs Floating The friendly market reaction to the Fed announcement helps reinforce the prevailing trading range. Risk-tolerant clients should use the ceiling of this range as a lock trigger while risk-averse clients can capitalize on mid-day price improvements. Volatility risk decreases over the next few days but will pick back up leading to the December 16th jobs report. Today's Events Jobless Claims: 236k vs 220k forecast Continued Claims: 1838k vs 1950k forecast Bond Pricing UMBS 30 yr | Coupon | Price | Intra-Day Change | | 5.0 | 99.27 | -0.1 | | 5.5 | 100.94 | -0.15 | | 6.0 | 102.41 | -0.02 | GNMA 30 yr | Coupon | Price | Intra-Day Change | | 5.0 | 99.47 | -0.09 | | 5.5 | 100.81 | -0.03 | | 6.0 | 101.63 | -0.18 | Treasuries | Term | Yield | Price | Intra-Day Yield Change | | 2 yr | 3.543 | 99.918 | 0.007 | | 3 yr | 3.591 | 99.744 | 0.008 | | 5 yr | 3.747 | 99.447 | 0.018 | | 7 yr | 3.951 | 98.784 | 0.024 | | 10 yr | 4.188 | 98.481 | 0.036 | | 30 yr | 4.851 | 96.444 | 0.054 |

The $1.5 Trillion Loop: How Six Tech Giants Trade Money Among Themselves

Money
December 12, 2025

The $1.5 Trillion Loop: How Six Tech Giants Trade Money Among Themselves

A web of cross-investments, mega-contracts, and reciprocal purchases has created what critics call an "infinite money glitch"—where much of the AI boom's apparent economic activity flows in circles among the same handful of companies.

The numbers are staggering: OpenAI has committed to over $1 trillion in infrastructure spending through 2035, yet nearly all of this money routes through just six companies. Nvidia invests $100 billion in OpenAI, which then buys Nvidia chips. Oracle spends $40 billion on Nvidia GPUs to build data centers that OpenAI leases for $300 billion. Microsoft invested $13.8 billion in OpenAI, which commits to spend $250 billion back on Microsoft Azure. This pattern—money circulating within a closed ecosystem rather than flowing outward to the broader economy—has drawn sharp criticism from legendary short-sellers like Michael Burry and Jim Chanos, who see troubling parallels to the dot-com collapse. Meanwhile, politicians keep quoting macro stats. "Business investment is up!" "Capital expenditure is booming!" What they don't mention: it's the same six companies writing checks to each other. Fifteen thousand mom-and-pop businesses can shutter their doors. But one $40 billion data center deal makes everything look just fine.

Project Stargate: The $500 Billion Merry-Go-Round

The most visible manifestation of this interconnected spending is Project Stargate, announced January 21, 2025, at a White House event with President Trump. Billed as a $500 billion AI infrastructure initiative over four years, Stargate exemplifies how money flows in tight loops among these companies. Here's how the money moves: Step 1: SoftBank and OpenAI each commit $19 billion to the joint venture (40% ownership each). Oracle and Abu Dhabi's MGX contribute $7 billion each. Microsoft and Nvidia serve as "technology partners." Step 2: Oracle takes that money and places a $40 billion order with Nvidia for GB200 GPUs. Step 3: Oracle builds data centers with those GPUs and leases the compute capacity back to OpenAI under a $300 billion, 15-year contract. Step 4: Nvidia announces it will invest up to $100 billion in OpenAI—effectively recycling the money OpenAI will spend buying Nvidia hardware. Notice anything? The money never really leaves the room. By September 2025, Stargate had expanded to five new data center sites across Texas, New Mexico, Ohio, and Wisconsin, with total planned capacity reaching 7 gigawatts and committed investment exceeding $400 billion.

The Nvidia Investment Loop: Financial Perpetual Motion

Nvidia sits at the center of what analysts call a "self-reinforcing loop." The company receives massive GPU orders from these six companies—totaling hundreds of billions—and has begun investing that capital back into its own customers. Here's the 2025 scorecard:

Deal	Amount	What Actually Happens
Nvidia → OpenAI investment	Up to $100B	OpenAI commits to buy millions of Nvidia GPUs
Nvidia → Anthropic investment	Up to $10B	Anthropic buys $30B in Azure (Nvidia-powered)
Oracle → Nvidia GPU purchase	$40B	Oracle leases compute to OpenAI
Meta → Nvidia (cumulative)	$30B+	Meta targets 1.3 million GPUs
Google → Nvidia GPUs	$10B+	GB200, GB300 purchases

NewStreet Research did the math: for every $10 billion Nvidia invests in OpenAI, it sees $35 billion in GPU purchases or lease payments—equal to roughly 27% of annual revenues. Here's the awkward part: Nvidia's CFO Colette Kress acknowledged in December 2025 that the OpenAI investment remains at the "letter of intent" stage with no finalized definitive agreement. The announcement juiced AI stocks for months. The actual signed contract? Still pending.

Microsoft-OpenAI: The Original Circular Relationship

The Microsoft-OpenAI financial relationship represents perhaps the purest example of circular money flow. Microsoft has invested a cumulative $13.8 billion in OpenAI, generating a paper profit of approximately $121 billion as OpenAI's valuation reached $500 billion in October 2025. In return:

OpenAI committed to $250 billion in incremental Azure cloud services through approximately 2030
OpenAI spent $8.65 billion on inference costs in Q1-Q3 2025 alone—much of it flowing to Microsoft
A bidirectional 20% revenue share means OpenAI paid Microsoft $866 million in the first three quarters of 2025
Microsoft now holds a 27% equity stake in OpenAI Group PBC following the October recapitalization

Leaked internal Microsoft documents revealed that OpenAI's inference spending on Azure reached $12.43 billion cumulatively through September 2025, while training costs were largely covered by Microsoft cloud credits—effectively non-cash circular transactions. Translation: Microsoft invests in OpenAI. OpenAI spends most of that money back at Microsoft. Microsoft books the revenue. OpenAI's valuation goes up. Microsoft's paper gains increase. Everyone high-fives.

Oracle: The AI Middleman Nobody Expected

Remember Oracle? The database company your IT department complains about? They've repositioned themselves as the critical middleman in this entire ecosystem—simultaneously purchasing from Nvidia and selling to OpenAI. The key 2025 deals: The $40 billion Nvidia GPU order (May 2025) involved approximately 400,000 GB200 "superchips" destined for the Abilene, Texas Stargate site. Oracle then leases this compute capacity to OpenAI under a 15-year agreement. The $300 billion Oracle-OpenAI cloud contract (September 2025) represents one of the largest cloud deals in corporate history, covering 4.5 gigawatts of data center capacity starting 2027. Oracle also locked in a $20 billion deal with Meta and partnered with AMD for 50,000 MI450 GPUs worth an estimated $3.5-4 billion. The result? Oracle's remaining performance obligations reached $455 billion—up 359% year-over-year—while lease commitments hit $248 billion by December 2025. Larry Ellison must be feeling pretty smug right now.

Meta and Alphabet: Keeping Up With the Capex Joneses

Not to be left out, Meta and Alphabet have committed their own unprecedented capital expenditure for 2025: Meta's 2025 spending:

Capital expenditure: $66-72 billion (raised from initial $60-65B guidance)
GPU fleet target: 1.3 million GPUs by end of 2025
Historical Nvidia spend: $30 billion (per AI boss Yann LeCun)
New Google Cloud deal: $10 billion+ over six years (August 2025)
Oracle cloud deal: $20 billion (multi-year, confirmed October 2025)

Alphabet's 2025 spending:

Capital expenditure: $91-93 billion (raised from initial $75B guidance)
GPU orders: 400,000+ GB200s valued at over $10 billion
Texas data center investment: $40 billion for three facilities through 2027

The August 2025 Meta-Google Cloud deal marked a notable new money flow—Meta using Google infrastructure for AI workloads. Reports indicate Meta is in advanced discussions to rent Google TPUs starting 2026, with potential purchases in 2027. Even these giants are now buying from each other.

The Critics: "Blessed Fraud" and Bubble Dynamics

Michael Burry, who famously predicted the 2008 financial crisis, has become the most vocal critic of these circular arrangements. In his November 2025 Substack "Cassandra Unchained," Burry wrote:

"And once again there is a Cisco at the center of it all, with the picks and shovels for all and the expansive vision to go with it. Its name is Nvidia."

Burry described the ecosystem as a "blessed fraud" where "clients driving AI growth are often funded by the very companies selling them AI technologies, creating an illusion of robust demand." He backed his thesis by purchasing over $1 billion in put options against Nvidia ($187.6 million) and Palantir ($912 million). When Nvidia responded with a 7-page memo to Wall Street analysts denying circular financing, Burry countered: "I stand by my analysis. I am not claiming Nvidia is Enron. It is clearly Cisco." Jim Chanos, who exposed Enron's fraud, echoed these concerns: "They're putting money into money-losing companies in order for those companies to order their chips." He warned of a "growing debt market backed by Nvidia's AI chips" and drew explicit parallels to Lucent's aggressive customer financing before the dot-com bust. Julien Garran of MacroStrategy Partnership offered the most bearish assessment: "This is the biggest and most dangerous bubble the world has ever seen"—estimating AI-related capital misallocation at 17 times the dot-com bubble and 4 times the 2008 real estate bubble.

The Macro Illusion: When Six Companies ARE the Economy

Here's where it gets concerning for anyone who cares about the actual economy—not just stock tickers. Analysis from Sparkling Capital found that Big Tech's AI spending "is now so large that it appears to be propping up the broader economy, accounting for an estimated half of U.S. GDP growth so far this year." Let that sink in. Half of GDP growth. Six companies. Writing checks to each other. JPMorgan notes that AI stocks account for 75% of S&P 500 returns, 80% of earnings growth, and 90% of capital spending growth since ChatGPT's release. Bank of America projects global hyperscale spending rising 67% in 2025 to $611 billion. Politicians love these numbers. "Look at all that investment! Look at that growth!" But here's what they're not mentioning:

An MIT survey found 95% of companies "are getting zero return" on their AI investments
Microsoft CEO Satya Nadella suggested the industry was headed toward an "overbuild"
OpenAI itself projects $44 billion in losses through 2028, with cash flow positive status not expected until 2029

The macro stats look great. The underlying reality is six companies playing a very expensive game of hot potato.

The House of Cards

The deals documented here involve real infrastructure—data centers under construction, GPUs being manufactured and deployed, services being rendered. This distinguishes 2025 from pure accounting frauds like Enron. But the concentration of spending among six interconnected companies, the unprecedented scale of reciprocal investments, and the reliance on future AI demand to justify current capital allocation creates genuine systemic risk. The core question remains unresolved: Is this a temporary acceleration phase before AI delivers transformative economic returns across the broader economy? Or are these companies, as Burry and Chanos suggest, essentially financing each other's revenues in a pattern that cannot survive a demand slowdown? With OpenAI's infrastructure commitments exceeding $1 trillion, Nvidia's $100 billion investment contingent on purchases of its own products, and combined hyperscaler capex approaching $400 billion annually, the answer will determine whether 2025 represents the foundation of an AI-driven economy—or the peak of history's largest technology bubble. Either way, next time a politician quotes business investment statistics at you, ask them a simple question: "Is that real economic activity, or just Nvidia buying OpenAI buying Oracle buying Nvidia?"

Sources

Bloomberg: "OpenAI's Nvidia, AMD Deals Boost $1 Trillion AI Boom With Circular Deals" (October 2025)
Bloomberg: "Oracle in Talks With Meta on $20 Billion AI Cloud Computing Deal" (September 2025)
Bloomberg: "Meta Signs $10 Billion Google Cloud Computing Deal Amid AI Race" (August 2025)
Bloomberg: "Google to Invest $40 Billion in New Data Centers in Texas" (November 2025)
CNBC: "Trump announces AI infrastructure investment backed by Oracle, OpenAI and Softbank" (January 2025)
CNBC: "Nvidia plans to invest up to $100 billion in OpenAI as part of data center buildout" (September 2025)
CNBC: "Amazon closes at record after $38 billion OpenAI deal with AWS" (November 2025)
CNBC: "Nvidia name-checks Michael Burry in secret memo pushing back on AI bubble allegations" (November 2025)
CNBC: "Anthropic valued in range of $350 billion following investment deal with Microsoft, Nvidia" (November 2025)
CNBC: "Oracle's lease commitments jump by almost 150% as company builds out to meet AI demand" (December 2025)
Data Center Dynamics: "OpenAI signs $300bn cloud deal with Oracle" (September 2025)
Data Center Dynamics: "OpenAI signs $38bn multi-year agreement with AWS for access to Nvidia GB200s and GB300s" (November 2025)
Fortune: "Nvidia CFO admits $100B OpenAI deal 'still' unsigned, months after boosting AI stocks" (December 2025)
Fortune: "Why the Oracle-OpenAI deal has set 'AI Bubble' alarm bells ringing" (September 2025)
Microsoft Official Blog: "The next chapter of the Microsoft–OpenAI partnership" (October 2025)
Nvidia Newsroom: "OpenAI and NVIDIA Announce Strategic Partnership to Deploy 10 Gigawatts of NVIDIA Systems" (September 2025)
OpenAI: "Announcing The Stargate Project" (January 2025)
OpenAI: "OpenAI, Oracle, and SoftBank expand Stargate with five new AI data center sites" (September 2025)
Philippe Oger: "Deep Dive into NVIDIA's Virtuous Cycle" (December 2025)
S&P Global: "SoftBank, OpenAI, Oracle and MGX commit to $100B for Stargate AI infrastructure" (January 2025)
SiliconANGLE: "OpenAI and Oracle strike $300B cloud computing deal to power AI" (September 2025)
TechCrunch: "This Thanksgiving's real drama may be Michael Burry versus Nvidia" (November 2025)
The Register: "AI's trillion dollar deal wheel bubbling around Nvidia, OpenAI" (November 2025)
Tom's Hardware: "Oracle has reportedly placed an order for $40 billion in Nvidia AI GPUs for a new OpenAI data center" (May 2025)
Tom's Hardware: "Meta to build 2GW data center with over 1.3 million Nvidia AI GPUs — invest $65B in AI in 2025" (January 2025)
Wikipedia: "Stargate LLC"
Yahoo Finance: "Nvidia's $100 billion OpenAI investment raises eyebrows and a key question: How much of the AI boom is just Nvidia's cash being recycled?"

What's up in Mortgage Today (AM) - 12/12/2025

Week In Review
December 12, 2025

WTMS Blog Today = What's up in Mortgage Today (AM) - 12/12/2025 Market traders are choosing their own adventure today as Treasury yields split directions after the Fed's rate cut. The 10-year yield pushed 4 basis points higher to 4.186% while 2-year yields barely budged, creating a noticeable divergence that's becoming more pronounced since Wednesday's Fed meeting. This spread means longer-term mortgage pricing could face more pressure even as short-term rates remain anchored by Fed policy. Chicago Fed President Goolsbee threw cold water on the recent rate cut this morning, stating there was little evidence the labor market was deteriorating enough to justify this week's move. His comments highlight growing concern among Fed officials that they may have acted prematurely without sufficient economic data. If Tuesday's jobs report shows strength, markets will increasingly view Wednesday's rate cut as a policy mistake. UMBS securities opened weaker with the 5.0 coupon down 17 basis points to 99.20, while GNMA bonds also declined across coupons. MBS traders are watching the yield curve steepening carefully, as it pressures lower-coupon 30-year mortgage bonds while benefiting adjustable-rate products. The curve movement reflects investors forcing long-term bonds to absorb selling pressure that short-term bonds can't handle due to Fed policy constraints. Industry forecasters expect 2026 mortgage rates to hover around 6%, offering only modest relief from this year's 6.6% average. Multiple housing analysts including Redfin, Realtor.com, and the National Association of Realtors project rates between 6.0% and 6.3% next year. This would continue the slow drift lower in borrowing costs but won't materially improve affordability for most homebuyers. Locking vs Floating The friendly market reaction to Wednesday's Fed announcement helps reinforce the current trading range for mortgage pricing. Risk-tolerant clients should use the ceiling of this range as a lock trigger, while risk-averse borrowers can capitalize on any mid-day price improvements that develop. Volatility risk decreases over the next few days but will pick back up heading into the December 16th jobs report. Today's Events - Jobless Claims: 236k vs 220k forecast - Continued Claims: 1838k vs 1950k forecast Bond Pricing UMBS 30 yr | Coupon | Price | Intra-Day Change | | 5.0 | 99.27 | -0.1 | | 5.5 | 100.94 | -0.15 | | 6.0 | 102.41 | -0.02 | GNMA 30 yr | Coupon | Price | Intra-Day Change | | 5.0 | 99.47 | -0.09 | | 5.5 | 100.81 | -0.03 | | 6.0 | 101.63 | -0.18 | Treasuries | Term | Yield | Price | Intra-Day Yield Change | | 2 yr | 3.543 | 99.918 | 0.007 | | 3 yr | 3.591 | 99.744 | 0.008 | | 5 yr | 3.747 | 99.447 | 0.018 | | 7 yr | 3.951 | 98.784 | 0.024 | | 10 yr | 4.188 | 98.481 | 0.036 | | 30 yr | 4.851 | 96.444 | 0.054 |

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The $1.5 Trillion Loop: How Six Tech Giants Trade Money Among Themselves

Project Stargate: The $500 Billion Merry-Go-Round

The Nvidia Investment Loop: Financial Perpetual Motion

Microsoft-OpenAI: The Original Circular Relationship

Oracle: The AI Middleman Nobody Expected

Meta and Alphabet: Keeping Up With the Capex Joneses

The Critics: "Blessed Fraud" and Bubble Dynamics

The Macro Illusion: When Six Companies ARE the Economy

The House of Cards

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What’s up in Mortgage Today (PM) – 12/12/2025