Nvidia "black swan" shakes faith in AI! Jensen Huang controversy brings in Treasury buying, long-end US Treasuries rise against the trend.

After a brief holiday, the US bond market resumed trading, with long-end Treasury prices edging higher. The NVIDIA Corporation (NVDA.US) controversy cast doubt on the AI trade narrative, prompting safe-haven buying to flow into Treasuries. The 30-year Treasury yield fell 2 basis points to 5.34%, with an auction of same-maturity debt due Thursday; the 10-year Treasury yield briefly dipped before stabilizing at 4.99%. Wednesday was Veterans Day in the US, with the cash Treasury market closed. Earlier reports said NVIDIA Corporation's board was considering removing CEO Jensen Huang, with allegations pointing to multiple extramarital affairs, news that hit market risk appetite. The chip giant is the core pillar of the AI rally, and any negative controversy could dent market confidence far beyond the company itself. Carol Kong, a strategist at Commonwealth Bank of Australia, said: "The series of news around Jensen Huang has further shaken market confidence in the AI narrative, driving modest safe-haven buying in Treasuries. NVIDIA Corporation is crucial to the AI investment boom and even the global economy, and without question, all market participants are closely watching how events unfold." Other sovereign bonds in the Asian session also drew buying, with Australian and New Zealand government bond yields falling at least 1 basis point. Strategist Mark Cranfield said: "Aggressive traders will likely view the modest rebound in Nasdaq futures as a window to rebuild macro hedge positions. That could also revive bond buying Treasuries have been under pressure and weakening all week." However, short-end Treasury yields edged higher as traders continued to bet on further Fed rate hikes, flattening the Treasury yield curve. The 2-year Treasury yield rose 3 basis points to 4.77%, and the 5-year yield rose 1 basis point to 4.83%. Swap markets showed traders pricing a 25 basis point rate hike at the Fed's December meeting after the key US consumer price indicator for October again came in stronger than expected. The data prompted Fed officials to open the door to more aggressive hikes in the coming months, with Governor Christopher Waller saying a 50 basis point hike may be needed in December. Andrew Ticehurst, a senior rates strategist at Nomura Holdings, Inc. Sponsored ADR in Sydney, said: "The rise in US short-end yields this morning is essentially the market continuing to reprice a more hawkish Fed policy path after the blowout inflation data, compounded by several officials' blunt hawkish remarks since. The market is now pricing close to 30 basis points for December, indicating it is seriously assessing the risk of a 50 basis point hike in December a signal worth noting."