Palo verde trees do best in gravelly soil with superb drainage. Neither the mulch nor organic matter will provide that. Consider creating a mound with boulders and gravelly soil and planting the tree in that. You don't say where you are, but the kiss of death for a PV tree is to be wet and cold at the same time, hence the need for superb drainage. Give them that and they are bullet-proof.

Thanks. Im in the (east) San Francisco Bay area but the climate is more like central valley- hot and dry.

Of course I plan to dig with sandy soil but my question still stands, and that if surrounding walnut matter will prevent establishment of a palo verde? It will be an ~8yo tree if it matters.

The point is that you don't want organic matter of any kind in the soil, walnut or otherwise. If you are not going to plant in your native clay, make a mound of gravelly soil (I use a mix of loam and 1/2" clean lava) and plant in it. No organic mulch. Try your best to replicate their native desert conditions. They are great trees, you will enjoy it.

Walnut left to more or less compost for a season should be relatively free of the juglone that inhibits plant growth. So I think it would be OK to use this mulch elsewhere, especially since it's fall and going into the dormant season. If you have one of those out there. :-]