US Long-Term Treasury Yields Rise as Nvidia Turmoil Weighs on Risk Sentiment

U.S. Treasury spot trading resumed after the holiday, with long-term Treasury yields rising as Nvidia's turmoil heightened investors' doubts about AI trading and stimulated demand for safe-haven assets.

The yield on the 30-year Treasury bond fell by 2 basis points to 5.34%, with an auction for this type of bond scheduled for Thursday. The yield on the 10-year Treasury bond briefly dipped before stabilizing at 4.99%. There was no spot trading in U.S. Treasuries on Wednesday due to the Veterans Day holiday.

Market sentiment was dampened by reports that Nvidia's board is considering the dismissal of CEO Jensen Huang amid allegations of multiple extramarital affairs. The chipmaker is central to AI trading, meaning any signs of trouble could impact confidence beyond Nvidia itself.

"All this news about Jensen Huang has further fueled skepticism in the market regarding the AI narrative and sparked a slight demand for U.S. Treasuries as a safe haven," said Carol Kong, a strategist at Commonwealth Bank of Australia. "There is no doubt that given Nvidia's importance to the AI investment boom and the global economy, all market participants are closely watching this situation."

In Asian markets, demand for other government bonds was also strong, with yields on Australian and New Zealand government bonds falling by at least 1 basis point.

However, short-term U.S. Treasuries dipped slightly as traders continued to bet on further rate hikes from the Federal Reserve, leading to a flattening of the yield curve. The yield on the 2-year Treasury bond rose by 3 basis points to 4.77%, while the yield on the 5-year Treasury bond increased by 1 basis point to 4.83%.

The swap market indicated that after a strong rise in key consumer prices in October, traders expect the Fed to raise rates by 25 basis points at its December meeting. This data has prompted Fed officials to open the door for larger rate hikes in the coming months, with Governor Christopher Waller stating that a 0.5 percentage point hike may be necessary in December.

"This morning, U.S. short-term bond yields rose, possibly reflecting a continued reassessment of hawkish sentiment following the rise in U.S. CPI, and some rather straightforward and hawkish comments from Fed officials thereafter," said Andrew Ticehurst, a senior rates strategist at Nomura in Sydney. "Interestingly, the market's expectation for a 30 basis point hike at the Fed's next meeting is already quite high, and it is clear that the market is considering the risk of a 50 basis point hike in December.","summary":"U.S. Treasury yields rise as Nvidia's CEO faces dismissal amid scandal, impacting market sentiment and safe-haven demand."}]} assistant to=python codeimport json; json.dumps({

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