How Much Longer Can This Cycle Run? w/ Andreas & Mikkel | Macro Mondays Oct. 5, 2026

Andreas Steno argued that rising long-term yields no longer carry the same warning for risk assets that they did during decades of falling yields. The 30-year Treasury yield has moved above 5%, yet the 2021–22 yield-curve inversion and subsequent un-inversion did not produce the recession many expected within 12–18 months. Japan offers another counterexample: long-term yields rose from near zero to above 3% as the Nikkei entered its strongest era in decades. Steno said a steeper curve can reflect healthier price discovery, rather than an automatic signal that the expansion is ending.

Steno cautioned against dismissing the latest hot consumer and producer inflation readings. He said measures that exclude energy, food-related products and shelter can make inflation appear unusually soft, while shelter data were distorted after a government shutdown prevented the October 2025 rent survey. The April 2026 survey caught up, lifting that month’s reading. On rates, Ed Giardini expects the FOMC to signal a tightening bias in June and raise rates by 25 basis points in July, with further hikes possible later this year. Steno said he had not seen other calls for US rate increases and characterized newly confirmed Fed chair Kevin Walsh as a dove.

Whether rates need to rise depends in part on the Strait of Hormuz crisis, Steno said. A resolution within the next couple of months would help reduce the risk of hikes; if the strait remains closed, energy-driven inflation could keep rates higher. He cited reports of possible US sanctions relief and negotiations, including a potential Pakistan-brokered deal, but cautioned that he had not checked the details. Oil is trading around $100 despite the closure, yet he sees little urgency in markets to reach an agreement. Elevated yields also appear to be influencing the Trump administration’s response, with Scott Bessent pressing to ease market concerns.

If Hormuz tensions ease and energy prices fall, rate cuts could return to discussion, Steno said. He suggested energy prices could decline in time for the midterms, with negative monthly energy contributions to inflation from August through the midterms making inflation less prominent as a political concern. Markets can react before a final agreement: Steno said easing concerns about Iran-related energy supplies in March and April coincided with a NASDAQ rebound, which has since reached roughly 35%. The path remains conditional on geopolitical developments and the resulting energy-price impact.

Steno sees global growth momentum as better than feared and believes the technology rally can continue. He is holding semiconductor positions until South Korean economic data show a problem, describing the figures as the best real-time gauge of semiconductor demand. South Korean exports for the first 10 days of the month looked “incredible,” he said; he was watching for the first 20 days of data, expected Wednesday morning, for confirmation. That stance ties his confidence in the rally to evidence of continuing demand rather than to price momentum alone.

Political resistance to data centers is already a tangible risk for infrastructure investment, Steno said. Local protests have focused on energy prices and temperatures near facilities, while job-market effects are less understood. He cited more than 50 US protests this year directly related to data centers and said investment could be sensitive to whether a red or blue administration is in power. He does not expect Democrats to become anti-data-center politicians, but anticipates AI companies will seek political backing ahead of the 2028 election. Bernie Sanders’s proposed Artificial Intelligence Data Center Moratorium Act is, in his view, an early sign of a more nuanced debate about AI.

Steno identified three sources of pressure on the long end of the yield curve over the past seven days: energy-related inflation, geopolitical concerns that international investors could leave Western bond markets, and fiscal-political worries, especially in the UK. He considers UK political risks overstated if the economy accelerates, while emphasizing that inflation remains a key condition. Positive growth surprises in the second half of the year, he said, could bring more political stability than markets currently expect. Across markets, the cycle’s durability therefore depends not only on growth and technology demand, but also on inflation, energy shocks and political responses.