Markets Risk-Off Following Nvidia Export Hit and Chair Powell Comments

Treasurys rise on Powell comments, Nvidia news. Treasury yields and equities fell today in a risk-off session. The flight to quality was initially driven by a warning from Nvidia that they would take a $5.5B hit from new government controls on semiconductor exports to China. The move continued after Chair Powell hinted that the US economy could enter a period stagflation, acknowledging risks of both elevated inflation and slowed economic growth. Treasury yields closed 4-9 bps lower on the day, with 2-year and 10-year yields now at 3.77% and 4.28%, respectively. Meanwhile, tech stocks were particularly hurt by Nvidia’s warning today, with the NASDAQ down 3.07% while the S&P 500 declined 2.24%.

Powell says Fed is still in no hurry to cut rates. During his speech today at the Economic Club of Chicago, Chair Powell reiterated the Fed’s commitment to price stability, raising questions about the extent to which the Fed might intervene if the economy deteriorates. He said the Fed’s “obligation is to keep longer-term inflation expectations well anchored,” a clear message that the Fed will be patient before cutting rates. Powell also acknowledged that the pace and intensity of tariff announcements have exceeded expectations, which has clouded the Fed’s outlook. Powell said, “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”

Retail sales hits a two-year high. As was expected by economic forecasts, retail sales soared to 1.4% in March from 0.2% in February. The spike was largely driven by a 5.3% increase in automobile vehicle and parts sales, a sign that consumers rushed purchases to preempt tariffs. Excluding autos, retail sales rose 0.5%, a slowdown from 0.7% in February. President Trump has acknowledged concerns about auto tariffs, and on Monday, he suggested that he may temporarily pause the levies. He stated, “I’m looking at something to help some of the car companies with it… they need a little bit of time because they’re going to make them here… So I’m talking about things like that.”