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

Andreas Theiner's nowcast for the August inflation print is 0.1 percent month-over-month for headline and 0.2 percent for core, both below market consensus, with market expectations having converged toward his figures over the prior one to two weeks. He attributes the soft readings partly to tariff revenues being recycled back to corporate America, reducing the urgency for companies to raise prices. Energy is expected to be a slight drag, and Theiner sees no panic in the physical oil market, with the spread between physical barrels and the front-month future roughly flat, signaling no incentive to draw barrels forward from storage. He expects a soft dollar week consistent with the soft inflation view.

On oil supply, Theiner cited Pentagon data showing flows through the Strait of Hormuz at seven to eight million barrels per day, though he flagged that this figure is higher than what Kepler shipping data shows, leaving some flows unaccounted for. China acted as the balancing force in the oil market during the peak panic period, with Chinese refiner rates now picking up, and Theiner expects China to serve as a floor under prices going forward. His base case is that oil prices chop sideways without a clear directional move, and that any decline will not be a straight line lower given Chinese demand support.

Theiner argued that the energy shock from the Iran war is effectively over and has been for some time. The most significant benign impulse on year-over-year inflation comparisons will arrive in late 2026 and into the first quarter of 2027 as base effects shift against the March through April price peak. Most major central banks built their June projections around an oil price assumption of roughly 115 dollars per barrel, and current prices are already below even the mild inflation scenario embedded in those forecasts. He expects September staff projections from major central banks to look materially softer on inflation, particularly if a second memorandum of understanding on trade materializes.

On the Federal Reserve, Theiner said the data probably argues for a cut rather than a hike, though he stopped short of predicting one. He said he struggles to construct a case for a rate hike and expects the Fed to effectively acknowledge this in September. He assessed New York Fed President Williams as a less influential voice now than during the Powell era given Williams's close association with Powell, but noted that Williams signaled openness to softer updated projections by stating he did not want to rely solely on backward-looking inflation data for the September decision.

Theiner attributed the summer rollover in his growth nowcast to a World Cup hangover effect rather than genuine economic deterioration, explaining that World Cup-related economic activity is front-loaded into the months before the event because bookings and payments precede the games themselves. He placed the likely peak in the rate of change for the US economy in late May. He offered a conditional prediction that the business cycle could peak in rate-of-change terms in the fourth quarter of 2026 if central banks continue hiking, while emphasizing that a momentum peak does not imply recession. His best guess for markets is another euphoric period before year-end, though he acknowledged meaningful uncertainty around that call.

South Korean semiconductor exports were reported up approximately 160 percent year over year, a figure described as more extreme than anything in the historical data series. The beginning of July was weak for Korean exports while the end of July was very strong, with early-month softness accounting for the small setback in the monthly aggregate. Forward pricing for companies tied to Korean export trade is effectively pricing nominal export growth to zero, which Theiner argued is the least likely scenario given the historically extreme nominal base and the improbability that AI-related capital spending simply plateaus indefinitely. He expected hyperscalers to raise AI capital expenditure guidance for at least another one or two quarters, noting that several already rebounded sharply after earnings even when capex guidance was increased, and flagged that the outlook beyond 2027 remains genuinely uncertain.