Is Inflation About to Derail the Rally? with Andreas Steno | Macro Mondays - Oct. 19, 2026

Andreas Steno said US inflation momentum had been roughly flat since the first week of May, even with the Strait of Hormuz crisis unresolved. Manufacturing is strengthening while services are weaker: the latest ISM data matched his nowcasts, and manufacturing is growing faster than before the war as new orders rise. He expects that momentum to continue for the next couple of quarters, helped by hardware and capital spending for AI data centers. His more constructive economic outlook, he said, helped capture the market rally of the past two months. He sees macro conditions as the main driver, rather than AI and electricity-bottleneck trades alone.

Recent Iran news moved markets only modestly, with oil rising a handful of percent and US equities nearly flat. The ceasefire and peace process nevertheless look increasingly fragile, though Miguel cautioned that reports about broken US-Iran WhatsApp communications and recent attacks were uncertain, including the meaning of the reports and the Farsi translation. Steno said the war has so far mattered less to the global economy than many initially feared, but stored oil and jet fuel cannot sustain conditions through year-end. He estimates six to seven weeks of reserves remain and expects US leverage to weaken substantially as that deadline approaches.

Steno’s base case is a ceasefire or longer-term deal that partially reopens the Strait of Hormuz during June, allowing the economy to keep accelerating. He said a resolution this quarter or early next quarter is needed to preserve the global upswing. A Houthi disruption of Red Sea shipping could cause several bad market days, although he said the group has had opportunities to act and does not appear willing to do so. The outlook therefore hinges on a near-term resolution: the economic effects have so far been limited, but that could change if shipping and fuel constraints persist.

He expects another strong month for liquidity, citing technical factors and the Treasury’s underestimation of its issuance needs. Tariff revenue is weak after rulings invalidated the reciprocal tariffs and the replacement 10% global tariff, worsening the deficit outlook. Steno expects the Treasury to repay more than it takes in over the coming month or two, leading to a large drawdown from the Treasury General Account over the next four to six weeks and transferring liquidity to private banks. He also said the deeply negative SOFA–effective Fed funds spread typically signals abundant dollars and bank balance-sheet capacity.

Leverage has risen during the rally and could keep building, including on the short side. Steno attributed some software strength to a short squeeze and called Bitcoin an unusual laggard among risk assets; a return of momentum could produce a violent move, but he said Bitcoin needs a trigger. He is underallocated to crypto relative to his usual position, while favoring security software for June and saying his team has doubled down and remains heavily allocated. He also sees computer and server makers as attractive, pointing to Dell’s numbers and HPE’s partnership with NVIDIA, and believes the trade is still in its early days.

Steno sees substantial potential in home-service robotics but said AI training requires extensive real-world recordings. He doubts humanoid robots will advance enough in the current cycle, while maintaining a five-to-seven-year view on the trend; his portfolio has shifted robotics exposure toward autonomous miles, where substantial driving recordings already exist. He described ServiceNow’s rally as involving a large short squeeze and called the combination of Claude recommending the stock and investors responding a circular, “peak meta” dynamic. Similar AI-generated recommendations could concentrate investors in the same trades and intensify momentum, producing extreme moves that may offer opportunities to fade them with good timing.