The Daily: Can NVDA Earnings Overwhelm Rising Yields?

MACRO – What’s Driving Overnight Risk?

Overnight Price Action

• Asia: Lower; technology and semiconductor shares remained under pressure ahead of Nvidia earnings
• Europe: Mixed; U.K. assets outperformed after softer inflation data while broader continental equities lagged
• U.S.: Futures firmer; semiconductors stabilizing after several sessions of selling pressure
• Rates: Treasury yields elevated but steady; global bond markets attempting to consolidate after the recent repricing
• FX: Dollar firm; higher yields continue supporting the greenback despite softer U.K. inflation data
• Commodities: Brent near $108 and WTI near $101 after Trump suggested the Iran war could end “very quickly”

Catalysts

• Nvidia reports after the close, with markets expecting EPS of $1.77 on revenue of $78.4 billion
• U.K. inflation slowed more than expected to 2.8% y/y while unemployment rose to 5.0%
• Senate procedural vote signaled growing political resistance to prolonging the Iran conflict
• China indicated willingness to accept some increase in U.S. tariffs while extending trade truce negotiations
• Xi and Putin signed a broad strategic cooperation pact covering roughly 40 agreements
• The EU finalized text for its U.S. trade agreement ahead of Trump’s tariff deadline
• FOMC minutes due this afternoon; markets focused on how hawkish the committee had become before
• Kevin Warsh assumes leadership on Friday

Market Implication

Markets are attempting to stabilize after a violent repricing in yields and volatility. Nvidia earnings, Fed minutes, and Treasury yields remain the dominant catalysts, while signs of progress around trade and Iran are modestly easing broader macro stress.

THEMATIC – Forces Behind the Tape

1. Nvidia Is Being Asked to Carry the Entire AI Trade Again

Nvidia reports tonight with expectations sitting at extreme levels. Markets expect quarterly revenue near $78.4 billion, almost doubling from the prior quarter, while EPS expectations have surged alongside the broader AI melt-up. Investors have spent the past several months extrapolating AI infrastructure demand far into the future while assigning premium valuations across the semiconductor ecosystem. Today’s hurdle is thus whether results and guidance can continue exceeding a market narrative that has become extraordinarily aggressive.

The broader earnings backdrop remains supportive. Applied Materials, AMD, Cisco, and hyperscalers all reinforced continued strength in compute demand, networking, memory, and data-center spending. At the same time, recent weakness in semiconductors and memory suppliers reflects growing sensitivity to valuation as global bond yields rise. Tonight’s report therefore matters well beyond Nvidia itself: markets are effectively asking whether AI earnings momentum can continue overpowering tighter financial conditions and higher discount rates.

2. Global Bond Markets Are Testing Central Banks

The global selloff in sovereign debt remains one of the defining macro stories underneath the surface. Treasury yields remain near multi-year highs, Japan’s long-end debt market continues weakening, and central banks increasingly face the challenge of balancing slowing growth against persistent inflation pressure. Today’s U.K. data highlighted that tension clearly. Inflation slowed more than expected thanks largely to regulated energy-price adjustments, but unemployment climbed to 5.0% as businesses absorbed higher financing and operating costs tied to the Iran conflict and broader inflation shock.

Markets are now scrutinizing today’s FOMC minutes for evidence that hawks had already begun consolidating influence inside the committee before Jerome Powell’s departure. If inflation concerns remain deeply embedded among policymakers, expectations for easier monetary policy could continue fading globally. The repricing underway in bond markets is tightening financial conditions across housing, consumer credit, corporate borrowing, and equity valuations simultaneously. Long-duration growth assets remain especially sensitive to further moves higher in real yields.

3. Trade Diplomacy is Improving While Geopolitical Alliances Harden

The global trade backdrop improved overnight as both China and the European Union moved closer toward stabilizing economic relationships with Washington. Beijing signaled willingness to accept some increase in tariffs while continuing discussions around extending the existing trade truce. The EU finalized the text of its trade agreement with the U.S. ahead of Trump’s threatened tariff deadline. Those developments supported risk sentiment because markets increasingly understand how important stable trade flows remain for industrial supply chains, agriculture, semiconductors, and AI infrastructure expansion.

At the same time, geopolitical alignment between China and Russia continues strengthening. Xi Jinping and Vladimir Putin signed roughly 40 agreements deepening strategic cooperation across energy, industry, and geopolitical coordination. That backdrop reinforces how rapidly the global economy is fragmenting into competing political and industrial blocs. Markets are responding positively to incremental trade stabilization while simultaneously pricing a world defined by higher strategic competition, greater industrial policy intervention, and more politically sensitive supply chains.

MICRO – Today’s U.S. Catalysts

Economic Calendar (CT)

• 1:00 – May FOMC Minutes; Markets focused on inflation persistence, oil pass-through, and committee hawkishness

TRENDING – Retail Radar

• Nvidia earnings tonight, AI infrastructure trade
• FOMC minutes, Treasury yield pressure
• China-U.S. trade truce
• Brent oil near $108, WTI above $101

KEY LEVELS TO WATCH

• S&P 500 (/ESM6) – Support/Resistance: 6925/7540
• Nasdaq 100 (/NQM6) – Support/Resistance: 25580/29782
• Crude Oil (/CLM6) – Support/Resistance: 78.97/110.93
• U.S. 10Y Yield – near 4.65%, highest since February 2025
• VIX – holding flat around 18

Trade Setup Bias

Neutral-to-constructive into Nvidia with disciplined positioning. AI infrastructure remains the strongest structural leadership group globally, though elevated yields and fragile bond markets continue increasing valuation sensitivity underneath the surface. Favor firms with strong earnings visibility, pricing power, and direct leverage to compute demand.

Bottom Line

Markets are balancing extraordinary AI earnings expectations against tightening financial conditions and elevated geopolitical risk. Nvidia now becomes the key test for whether the AI infrastructure trade can continue powering equities higher while global bond markets keep repricing the cost of capital.

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx