As long-term U.S. Treasury yields rise, the excitement around Jackson Hole overshadows Nvidia's performance! The speech by Waller may determine the next stage for risk assets.

Ann Miletti, a senior executive at the renowned Wall Street investment firm Allspring Global Investments, recently indicated that the upcoming Jackson Hole global central bank economic policy symposium is more concerning for Wall Street and retail investors than the latest results and future outlook of NVIDIA Corporation (NVDA.US), the AI chip giant valued at over $5 trillion, which will also be released next week. Several experienced strategists on Wall Street, including Miletti, have warned that the risks associated with Jackson Hole outweigh those of NVIDIA Corporations earnings report. Their underlying reasoning is focused on the fact that the recent surge in long-term U.S. Treasury yields, reaching levels not seen in 20 years, is putting pressure on global risk assets, thus creating a distinctly different layer of influence between the two events. NVIDIA Corporations performance primarily pertains to reassessing AI computing demand, profitability along the AI computing supply chain, and orders within that chain, representing a single profit anchor; however, the speech by Waller could potentially alter expectations of Federal Reserve interest rates, long-term Treasury yield premiums, dollar liquidity, and the discount rate for global risk assets, constituting a systemic pricing anchor. As of August 20, the yields on 10-year and 30-year U.S. Treasuries stood at 4.69% and 5.23%, respectively, with the benchmark corporate borrowing cost in the credit market rising from below 5% at the beginning of the year to over 5.5%. Following this, the U.S. Treasury unexpectedly announced a plan to double the size of its long-term Treasury buyback; however, the long-term Treasury market quickly reversed nearly all of the gains from this intervention in just one day. For data center construction processesdependent on massive AI computing capital expenditure and debt financingand the fundamental outlook for the global AI computing supply chain, the rapid rise in yields deteriorates internal rates of return, present values of free cash flows, and valuations for technology stocks. NVIDIA Corporation is ceding ground to the soaring long-term Treasury yields, while Wallers imminent high-profile speech could set the tone for the next phase of global risk assets. "Amidst all these complex developments, we strive to focus on the factors we can control," Miletti stated, who heads Allspring's equity investment business. "From a bottom-up perspective, truly understanding which companies possess sufficiently robust balance sheets and flexibility to navigate any degree of market environmentthats what we are genuinely focused on and what we can manage." In an interview with the media on Friday, Miletti suggested that investors should temper their expectations ahead of the Jackson Hole global central bank symposium. This high-profile conference, hosted by the Kansas City Federal Reserve and set to feature a keynote speech from Federal Reserve Chair Kevin Waller on August 28, will take place just two days after NVIDIA Corporation reports its quarterly earnings; the current market capitalization of $5.2 trillion makes NVIDIA Corporation the highest-valued publicly traded company globally. Both NVIDIA Corporation and the Jackson Hole meeting will be focal points of Wall Street next week. However, the global central bank conference led by the Federal Reserve could present a greater level of uncertainty, as yields on 10-year and longer-term U.S. Treasuries have surged significantly since last month's Federal Open Market Committee (FOMC) meeting, and Wallers ambiguous statements at the last press conference following the Feds monetary policy decision have left many traders questioning his willingness to take action on inflation. Miletti noted that the corporate benchmark borrowing costs have risen from below 5% at the start of the year to above 5.5%. While this absolute level is not extreme historically, "what truly may make an impact is the speed and magnitude of the changes"especially against the backdrop of the current massive capital expenditures related to AI computing. Miletti also serves as Allspring's Chief Diversity Officer. This week, the sharp turbulence in the global bond market, along with the surge in bond yields leading to a pullback in the global stock market, has further amplified these concerns: the 30-year U.S. Treasury yield once soared above 5.3%, prompting U.S. Treasury Secretary Scott Bischoff to decide to double the planned debt buyback amount to $4 billion. This sudden intervention briefly ignited market optimism but failed to produce a lasting significant relief effect. Regarding the equity market, Miletti mentioned that following the substantial correction in global tech stocks in July, she "wouldnt mind the market adjusting a bit more," as this would place the market "in a more favorable valuation position, thus ensuring stability for the remainder of this year." She indicated that the healthcare sector and small-cap industrial stocks are her preferred investment areas. Although healthcare stocks have previously underperformed, as investors begin to recognize the potential for AI-driven innovations in healthcare, coupled with the strong investment appeal of this classic defensive sector during periods of tech stock volatility, a significant capital rotation is gradually forming. The surge in U.S. Treasury yields is becoming Wall Street's greatest stress test, with Waller effectively controlling the "master switch" for global valuations. The macro shock led by the rapid rise in U.S. Treasury yields of 10 years and longer is colliding with an exceptionally fragile U.S. equity market structure. Data from Goldman Sachs Group, Inc. shows that systematic long-short strategies dropped 1.4% in one day, exceeding the 3 standard deviations of daily fluctuations observed over the past three years; the global momentum factor plunged 4.7 standard deviations in one day, with Goldman Sachs Group, Inc.s U.S. momentum factor drastically declining nearly 7% within 48 hours. This indicates that current market prices are not solely determined by fundamentals, but also influenced by leverage, liquidity, and the nonlinear dominance of quantitative risk controls. Meanwhile, the market debate surrounding the AI super bull market has shifted from is the demand for computing power real to can the momentum of profit growth keep pace with increasingly extreme growth expectations. Thus, Goldman Sachs Group, Inc. regards NVIDIA Corporation's earnings report as a more neutral catalyst; even with strong performance, as long as Waller's statements at Jackson Hole substantially push up real rates and capital costs, stocks related to the semiconductor, cloud computing, AI application software, and the AI computing supply chain may still face systemic valuation compression. Waller's keynote address at Jackson Hole on August 28 will mark the first of his career as Federal Reserve Chair. The crucial aspect is not merely to issue "hawkish" or "dovish" rhetoric but whether the Federal Reserve, under Wallers leadership in scaling back forward guidance, can provide a credible anti-inflation response functionnamely, what data would trigger interest rate hikes, how to view the current rate range of 3.50%-3.75%, how to harmonize balance sheet reduction with Treasury bond buybacks, and whether to adhere to the 2% inflation target. The minutes from the July Federal Reserve meeting revealed that several officials advocated for a 25 basis point rate hike; at the same time, Wallers moves to reduce forward guidance and shorten policy statements have heightened policy uncertainty. Goldman Sachs Group, Inc. estimates that enhanced communication from central banks previously significantly lowered interest rate volatility by about 10% over the coming year; therefore, if Waller continues to maintain ambiguity, investors may "punish silence" by demanding higher yield premiums, meaning that even without a rate hike, long-term U.S. Treasury yields may continue to rise. For global tech stocks, the most favorable scenario isn't an unconditional dovish stance, but rather Waller providing a clear, verifiable, and data-dependent anti-inflation roadmap, thereby reducing policy uncertainty and long-end yield premiums. A clearly defined hawkish approach might first elevate real rates and the dollar while impacting global growth stocks, but it could help re-anchor long-term inflation expectations. The most dangerous combination would be short-term verbal easing paired with a long-term lack of fiscal and inflation constraintspotentially resulting in a "bear steepening" where short-end yields decrease while long-end yields rise; following the Treasury's decision to double the single buyback amount of 10- to 30-year Treasuries to $4 billion, yields quickly resumed their upward trajectory, underscoring that the market needs a credible policy framework rather than transient liquidity interventions.