As long-term U.S. Treasury yields rise, Jackson Hole steals the spotlight from Nvidia's earnings! Powell's speech may determine the next phase for risk assets.

According to Zhitong Finance APP, Ann Miletti, a senior executive from the renowned Wall Street investment firm Allspring Global Investments, recently stated that compared to the "global benchmark for AI computing power"—Nvidia (NVDA.US), the AI chip giant with a market cap exceeding $5 trillion, which is also set to release its latest earnings and outlook next week, the upcoming Jackson Hole Global Central Bank Economic Policy Symposium poses even greater cause for concern for both Wall Street and retail investors.

Several seasoned Wall Street strategists, including Miletti, have recently warned that the risks at Jackson Hole outweigh those of Nvidia’s earnings. Their underlying logic focuses on the recent surge of the 10-year and longer-term U.S. Treasury yields to their highest levels in 20 years, putting pressure on global risk assets. The impact of these two events is now fundamentally different. Nvidia’s performance primarily serves as a "single profit anchor" by repricing AI computing power demand, profit margins within the AI hardware supply chain, and industry orders. In contrast, Walsh’s speech could simultaneously alter expectations around Federal Reserve monetary policy rates, long-term Treasury term premiums, dollar liquidity, and the discount rate for global risk assets—the so-called "systemic pricing anchor."

As of August 20th, the yields of the 10-year and 30-year U.S. Treasuries reached 4.69% and 5.23% respectively, with benchmark corporate borrowing costs in the credit market rising from under 5% at the start of the year to above 5.5%. Although the U.S. Treasury unexpectedly announced a ramp-up in long-term Treasury buybacks, the long-end Treasury market almost erased these intervention-driven gains in just one day. For the data center construction process and broader AI computing power industry fundamentals, which rely heavily on huge AI infrastructure capital expenditures and debt financing, rapidly rising yields simultaneously compress internal rates of return, the present value of free cash flow, and valuation multiples of tech stocks.

Nvidia’s $5.2 trillion market cap yields to long-term U.S. Treasury yield surge momentum; the upcoming blockbuster speech by Walsh may set the tone for the next phase of global risk assets

“Amid all these complex developments, our focus remains on factors we can control,” said Miletti, head of equity investing at Allspring. “We study companies from the bottom-up to truly identify which ones have sufficiently robust balance sheets and flexibility to weather any market environment. That’s our real focal area, and that’s what we’re able to control.”

In a media interview on Friday, Miletti stated that investors should lower their expectations ahead of the Jackson Hole Central Bank Symposium. Hosted by the Kansas City Fed and featuring Federal Reserve Chair Kevin Walsh’s keynote address on August 28th, this major event will take place two days after Nvidia reports its quarterly results. Nvidia currently stands as the world's most valuable publicly traded company, with a market cap of $5.2 trillion.

Both Nvidia and the Jackson Hole symposium will command the attention of all Wall Street next week. However, the Fed-led global central bank meeting likely presents a greater degree of uncertainty, because since last month’s Fed FOMC monetary policy meeting, yields on 10-year and longer-term U.S. Treasuries have soared, while Walsh’s ambiguous remarks at that meeting’s ensuing press conference left many traders doubting his willingness to act against inflation.

Miletti noted that corporate benchmark borrowing costs have risen from below 5% at the start of the year to above 5.5%. While this absolute level may not be extreme from a historical perspective, “what could truly have an impact is the speed and scale of the change”—especially against the backdrop of such massive capital expenditures interconnected with AI computing power. Miletti is also Allspring’s Chief Diversity Officer.

This week, the violent swings in global bond markets and the surge in bond yields pushing global equities into a correction have intensified these concerns: the 30-year U.S. Treasury yield soared past 5.3% at one point, after which Treasury Secretary Scott Besant decided to double the planned debt buyback to $4 billion. This unexpected intervention briefly sparked optimism but failed to generate any lasting relief.

As for the equities market, Miletti said that after the sharp pullback in global tech stocks in July, she “would not mind a further market adjustment,” as it would “put valuations in a more favorable position, enabling greater stability for the remainder of the year.”

She noted that health care and small-cap industrials are her preferred investment sectors. While health care stocks have lagged previously, investors are increasingly recognizing the innovative impact of AI in the health care sector. Combined with the classic defensive appeal of the sector during tech stock turbulence, a major rotation of funds is gradually taking shape.

Soaring U.S. Treasury yields are Wall Street’s biggest stress test, with Walsh essentially controlling the global valuation “master switch”

The macro shock led by the surge in 10-year and longer-term Treasury yields within just a few days is colliding with an unusually fragile U.S. equity market structure. Goldman Sachs trading desk data shows that systematic long-short strategy returns fell by 1.4% in a day—over three standard deviations from daily moves in the past three years. The global momentum factor plunged by 4.7 standard deviations in a single day, and the Goldman U.S. momentum factor tanked nearly 7% in 48 hours. This means current prices are being governed not just by fundamentals but also by non-linear influences from leverage, liquidity, and quant risk controls.

Meanwhile, the debate around the AI super bull market has shifted from “is the demand for computing power real?” to “can the momentum in profit growth keep pace with the market’s increasingly extreme expectations?” As such, Goldman views Nvidia’s earnings as closer to a neutral catalyst; even if results are strong, should Walsh's Jackson Hole remarks drive real rates and capital costs higher, stocks related to AI hardware—semiconductors, cloud computing, AI software, and data center supply chains—may still face systematic valuation compression.

Walsh’s upcoming August 28th keynote at Jackson Hole, his first as Fed Chair, is crucial not for simple “hawkish” or “dovish” posturing, but for whether the Fed under his leadership can provide a credible anti-inflation reaction function amid the reduced forward guidance framework—which data would trigger rate hikes, how he views the current 3.50%–3.75% rate range, how to coordinate balance sheet reductions with Treasury buybacks, and whether he will stick to the 2% inflation target.

Minutes from July’s Fed meeting showed several officials argued for a 25 basis point hike; meanwhile, Walsh’s push to reduce forward guidance and shorten policy statements has increased policy uncertainty. Goldman Sachs estimates that enhanced central bank communication reduced interest rate volatility by about 10% over the following year; therefore, should Walsh remain vague, investors may demand a higher term premium to “punish the silence,” and long-term Treasury yields could rise even if the Fed holds rates steady.

For global tech stocks, the most favorable scenario is not unconditional dovishness but for Walsh to provide a clear, verifiable, and data-dependent anti-inflation roadmap, thereby reducing policy uncertainty and the long-end term premium. Explicit hawkishness might first push up real rates and the dollar, pressuring global growth stocks, but it would help re-anchor long-term inflation. The most dangerous combination would be short-term verbal easing with a long-term lack of fiscal and inflation discipline—potentially causing a “bear steepener” where short-end yields fall but long-end yields rise. After the Treasury doubled its single long-end buyback size to $4 billion, yields quickly resumed climbing, further highlighting that the market needs a credible policy framework rather than a fleeting liquidity intervention.