Tonight’s Jackson Hole drama was laid bare by BofA:

The current AI bull market’s Achilles’ heel is entirely tied to long-term U.S. Treasury yields.
Everyone thinks tech stocks are rising because large language models are powerful, but the data shows that the bond market is actually taking the lead and driving the bubble.
The situation is especially twisted: BofA’s Bull & Bear Indicator has surged to 9.7, basically signaling that everyone is going long behind closed doors.
82% of stock indexes are in overbought territory, just one step away from the 88% liquidation alarm.
Even more outrageous, inflows into gold and crypto hit a new high since October 2025 this week, with gold attracting $7.3 billion and crypto $3.2 billion.
People are partying in tech stocks while frantically buying insurance on the side, showing just how fragile the consensus is.
Warsh’s exam tonight is extremely difficult:
He has to put on a show of a bullish yield-curve flattening.
On one hand, he must take a hard line on inflation and keep short-term rates pinned down;
On the other, he must turn dovish on long-term bonds and help ease the pressure on the Treasury crowd.
If he flubs it, and the 10-year yield breaks above 4.7% or the 30-year yield jumps past 5.3%, the AI infrastructure party could be over.
The SOX Semiconductor Index and the MAGS mega-caps are now extremely sensitive to interest rates.
My personal view is that, despite the S&P still rising, U.S. stocks have just posted their first net outflow in five weeks, at $4.4 billion.
Smart money is moving into investment-grade bonds and TIPS.
If Warsh fails to push down long-term rates tonight, defensive assets will inevitably outperform cyclical stocks.