Nvidia shock lifts long-dated U.S. Treasuries

Long-term U.S. Treasuries advanced as cash trading resumed after the Veterans Day holiday, with investors showing renewed demand for safe-haven assets. The 30-year U.S. Treasury yield fell 2 basis points to 5.34% ahead of an auction of similar-maturity securities scheduled for Thursday. The 10-year yield briefly declined before holding at 4.99%, underscoring support at the long end of the curve despite recent volatility.

The move in long-dated bonds occurred as market participants reassessed risk exposures following developments in the technology sector. Gains in U.S. Treasuries followed a period without cash trading on Wednesday, when markets were closed for the holiday, concentrating price adjustments into the reopening session.

Investor sentiment was hit by a report that Nvidia ([NVDA])’s board was considering the removal of Chief Executive Officer Jensen Huang following allegations of multiple extramarital affairs. Market participants viewed these headlines as undermining confidence in a key driver of recent equity gains.

The shift in risk appetite was visible across U.S. equity futures. Nasdaq futures fell almost 1%, while S&P 500 contracts declined 0.5%, after Nvidia shares tumbled about 10% in late trading. Strategists noted that the news around Huang deepened doubts about the AI narrative and contributed to a modest safe-haven bid for U.S. Treasuries.

While long-end Treasuries gained, shorter-dated U.S. government bonds weakened as expectations for further Federal Reserve interest-rate hikes persisted. The 2-year Treasury yield rose 3 basis points to 4.77%, and the 5-year yield increased 1 basis point to 4.83%. These moves, alongside lower long-term yields, resulted in a flatter yield curve.

Some analysts linked higher short-term yields to a renewed hawkish repricing following a strong rise in the U.S. consumer price index in October and direct hawkish remarks from Federal Reserve officials. Fed Governor Christopher Waller said a 0.5-percentage-point increase may be needed at the December meeting, reinforcing the possibility of more aggressive tightening.

Swap markets reflected expectations for at least a 25-basis-point interest-rate hike at the Federal Reserve’s December meeting. Market pricing also incorporated the risk of a larger 50-basis-point move, consistent with recent commentary from policymakers. The combination of tighter policy expectations and equity weakness provided a backdrop for the divergence between short- and long-term yields.

Outside the U.S., demand for government bonds extended to Asia-Pacific markets. Yields on Australian and New Zealand government bonds fell by at least 1 basis point, signaling broader regional appetite for safer assets amid the uncertainty surrounding Nvidia and the outlook for U.S. monetary policy.