Nvidia's "black swan" shakes up AI faith! Jensen Huang's controversy draws in U.S. Treasury bond buying, long-term U.S. Treasuries rise against the trend

According to Jinse Finance APP, after a brief holiday, the US bond market resumed trading, with long-term US Treasury prices edging higher. The turbulence around NVIDIA (NVDA.US) has caused doubts about the AI trading narrative, leading to safe-haven buying into US Treasuries.

The 30-year US Treasury yield fell by 2 basis points to 5.34%, with an auction for the same maturity scheduled on Thursday; the 10-year US Treasury yield dipped briefly before stabilizing at 4.99%. Wednesday marks Veterans Day in the US, and the cash Treasury market is closed.

Earlier reports claimed that NVIDIA's board is considering removing CEO Jensen Huang, with allegations pointing to multiple extramarital affairs. The news hit market risk appetite. This chip giant is a core pillar of the AI-uptrend, and any negative incident could impact market confidence far beyond the company itself.

Carol Kong, strategist at Commonwealth Bank of Australia, stated: "A series of news around Jensen Huang further shakes market confidence in the AI narrative and leads to a modest safe-haven bid for US Treasuries. NVIDIA is crucial not only to the AI investment boom but also to the global economy. Without a doubt, all market participants are closely watching how events unfold."

Other sovereign bonds in the Asian session also attracted bids, with Australian and New Zealand bond yields falling by at least 1 basis point.

Strategist Mark Cranfield commented: "Aggressive traders will likely view the mild rebound in the Nasdaq as a window to rebuild macro hedging positions. This could also revive demand for bonds—US Treasuries have been under pressure all week."

However, short-term US Treasury yields edged higher, as traders continued to bet on further Fed rate hikes, flattening the US Treasury yield curve. The 2-year Treasury yield rose by 3 basis points to 4.77%, and the 5-year yield increased by 1 basis point to 4.83%.

Swap markets show that, after key US consumer price indicators beat expectations once again in October, traders are pricing in a 25 basis point Fed rate hike at the December meeting. This data has prompted Fed officials to open the door for more aggressive hikes over the coming months; Board member Christopher Waller said a 50 basis point hike may be necessary in December.

Andrew Ticehurst, senior rates strategist at Nomura Holdings in Sydney, said: "US short-term yields moved higher this morning, essentially because after the inflation data exploded, the market continues to reprice for an increasingly hawkish Fed policy, coupled with direct hawkish comments from several officials soon after. The market is now pricing close to 30 basis points for a December rate hike, suggesting serious consideration is being given to the risk of a 50 basis point move in December—a signal worth watching."