The most likely outcome and the one pretty much everybody is rooting for is that Nvidia's (NVDA) numbers are good enough to send the all-important stock to a fresh high and equity indexes alongside with it.

Combined with the Jackson Hole Advent of an eagerly dovish Powell, a satisfactory report from Nvidia would be as strong of a case for a mid-cycle refresh in the stock market as one could ask for. There's not a lot that matters more than those two forces in determining the outcome for stocks.

However, there's another important situation developing in the background. At face value, the Treasury market looks fairly calm – the 10-year yield hasn't really moved much for the last 3 weeks since hitting a low of 3.8% at the nadir of the yen turbulence on Aug 2. But the longer-term downtrend in yields and the fact Powell left the door open to 50bps is starting to apply some pressure on the chart, visible through a descending triangle in the 10-year yield. The pattern suggests odds are that yields break lower towards 3.5%. if that doesn't happen, it could be a quick trip back to 4.1%. Basically, that means bonds look poised to get volatile no matter what, and because Treasury volatility has been skewed so bullish, one could imagine a huge bond rally if any of the upcoming data – GDP, jobless claims, inflation – disappoint severely.

Another possibility for a bond rally would be a disappointment from Nvidia that drags the broad stock market lower. Record-high prices in risk assets are undoubtedly contributing to consumer confidence and the stability of the economy, so another crash in Nvidia would be good reason to buy more bonds.

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