Long Treasuries gain as Nvidia weighs ousting Huang

Long-dated US Treasuries rose as cash trading reopened on Thursday, November 12, after the Veterans Day holiday. Reports that Nvidia's ↗ 2.87% board was weighing whether to remove Chief Executive Officer Jensen Huang shook confidence in the artificial intelligence trade and sent investors toward safer assets. The 30-year yield slipped two basis points to 5.34% ahead of Thursday's auction of bonds with the same maturity, according to Bloomberg. The 10-year yield dipped briefly and then held at 4.99%.bloomberg.com

The moves left the yield curve flatter. The front end held under pressure from bets on further Federal Reserve rate hikes, while the long end found buyers seeking havens.

Nvidia turmoil spills into rates

Bloomberg said the chipmaker sits at the center of the AI trade, so trouble there could undermine confidence well beyond the company itself. "All this news about Huang has further deepened market doubts about the AI narrative and prompted modest safe-haven demand for U.S. Treasuries," Commonwealth Bank of Australia strategist Carol Kong said, according to a market report. Australian and New Zealand government bond yields also fell.tradingview.com+1

The crisis grew on Wednesday. The New York Times reported that Huang had a second extramarital affair, this time with an Nvidia executive who reported to him, and The Wall Street Journal then reported that the board was preparing to oust him. Nvidia shares fell more than 8% in after-hours trading, Forbes reported. Reuters, citing a source, reported that the board met late Wednesday to decide Huang's future. That was a sharp reversal from Sunday, when the directors voiced confidence in him while opening an investigation into whether he had been targeted by a foreign intelligence effort. At the time of an FT recording, the board had not announced a decision.miamiherald.com+2

Short end tracks Fed hike bets

Shorter-dated Treasuries fell. The 2-year yield rose three basis points to 4.77%, and the 5-year yield rose one basis point to 4.83%, the report said. Swaps priced in a quarter-point hike at the Fed's December meeting after a hot October consumer price index reading. Fed Governor Christopher Waller has said a half-point increase may be needed.tradingview.com

"Higher U.S. short-term bond yields this morning may reflect continued hawkish repricing following the higher U.S. CPI and some fairly direct, hawkish remarks from Fed officials," Nomura's Andrew Ticehurst said.

Thursday also brings jobless claims data and the 30-year auction, Saxo noted. Investors are also waiting for Nvidia's leadership decision and its November 17 earnings report.home.saxo