Is the Economy Running Too Hot? | Macro Mondays: August 10, 2026

Core view: inflation is running colder than the market believes, and the Fed's data argues for cuts, not the hikes now being priced. Steno's nowcast has US headline inflation at +0.1% and core at +0.2% month-over-month for the print due Wednesday, below the market's 3.4% year-over-year headline expectation — though he notes the market has "converged towards our view" over the past week or two. The mechanism: tariffs are increasingly being paid back to corporate America rather than extracted from it, reversing the pass-through dynamic that drove inflation for most of the last two years. A company receiving tariff refunds has no urgency to raise prices, and Steno says that's showing up directly in the nowcast data.

This feeds his Fed call. He points to New York Fed's Williams pushing back on making September decisions by "looking in the rearview mirror" on inflation, and argues the real catalyst is stale central-bank assumptions: most major central banks built their June staff projections around oil near $115, a level far above where crude actually trades now. When September's updated staff projections land, he expects them to look "a lot softer" across the board. His framing is deliberately hedged: "our data probably tells the Fed that it should cut, not hike. I'm not saying that they will cut." He says he struggles to identify any current data — inflation or growth — that actually supports a hike.

Energy: the shock is over, and the market hasn't fully priced that. Dated (physical) oil prices are roughly flat versus the front-month future, which Steno reads as evidence there's no urgency to pull barrels forward — i.e., no real tightness. He's been arguing for weeks that there's little risk premium left to strip out of the energy complex around the second Memorandum of Understanding on the Strait of Hormuz. If a source cited by Axios is right, flows through the Strait are running 7–8 million barrels a day, above what shipment-tracking services like Kepler show, meaning the market may be underestimating actual throughput. China's refinery run rates have also picked up, which he expects to act as a persistent floor under prices even as risk premium fades. Net: energy is a mild inflation drag this month, not a major one, with the bigger year-over-year benign impulse landing late 2026 into Q1 2027 as comparisons roll off the Iran-war price peak from March/April.

Growth: the summer rollover is a World Cup hangover, not a recession signal — yet. The growth nowcast has fallen meaningfully over the summer, and Friday's jobs report showed a weak leisure-and-hospitality print. Steno attributes this to timing: World Cup-related spending (travel bookings, ticket purchases) front-ran the event itself due to how the data captures transactions, so the activity boost actually showed up in March–May, and the nowcast's rate-of-change measure peaked around late May. He's "yet to be worried" — this is a leveling-off versus a strong Q2, not a collapse. Looking further out, he floats a scenario where the business cycle, measured in rate-of-change terms, could peak in Q4 2026 if central banks keep tightening elsewhere — explicitly not a call that the cycle itself ends, since "it doesn't necessarily mean that we go from peak to recession." He separately expects "another euphoric market" before year-end. On his forecasting process, he notes the nowcasting approach has probably been the best inflation and PMI forecaster this year, with a six-to-seven week lead over official BLS data.

Korea exports / AI capex: forward pricing assumes a flatline that he says won't happen. Steno tracks South Korea's 10-day export data as a leading AI-trade indicator. Early July was weak, late July "incredibly strong," and semiconductor exports are up roughly 160% year-over-year. His argument: the market has correctly concluded the rate-of-change is peaking ("it doesn't take a genius" to see that off such an extreme base), but forward pricing for companies tied to this export trade effectively assumes nominal growth goes flat from here — the dark-line export trend plateauing rather than continuing to grow or decelerating. He calls this the one outcome that categorically won't happen: growth either continues (even at a slower rate, e.g., 25–50% versus 160%, still large in nominal terms) or decelerates further, but a flat plateau isn't realistic. On hyperscaler capex, he notes companies raised CapEx guidance again after Q2 earnings and were rewarded by the market for it, and expects at least another quarter or two of guidance increases before any real test of the spending cycle emerges, likely not before 2027.