Are Markets Ignoring Inflation? | Macro Mondays: May 18, 2026

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1:08Hello out there. Welcome to Real Vision. Welcome to Macro Mondays. My name is Miguel Osmal. I'm joined as usual by my co-host Andreas Steno. And we have a jam-packed show for you today once more. We are looking back at the Trump-She summits. We're looking a little bit at interest rates. And then we're obviously looking at the inflation reports we got last week. Do we need to worry? Is this the end of the good times? We'll take a look at it. And, of course, we'll cover the latest dose of Iran popium that we just got over the morning here. So lots of stuff to talk about. Andreas, how are you feeling?

1:47We had an extended weekend in Denmark. We are Europers, after all. And we're entering the part of the year where we have public holidays left, right and center. So how was your weekend, Andreas?

1:58Andreas Steno:Well, you're absolutely right. You should expect us to be off three to four days a week on average from now on until the end of June. So I guess it could be worse. End of August, really? Yeah, sure. Yeah, we're off all of July. So, I mean, I just took that for granted. Absolutely. Now, even though we have a lot of public holidays, we still have lots of great content here in Real Vision. We do have collaborators outside of Europe, thankfully, both in Australia and the States. So remember, on Wednesday, that's the big one this week, on 4 p.m. Eastern, for all pro members, we have a roundtable discussion.

2:37So that's going to be you and Andres, Jamie, and Raul talking everything macro, crypto, AI, just shooting shit. So it's going to be really, really fun, really looking forward to that show, getting all the good guys together. So really looking forward to that one. Remember, this is our free weekly sneak peek into the world of Mac Pro and the publications that we publish on Real Vision. To get full access, you need Pro Access for Real Vision. That gives you access to our three weekly articles. That includes the Steno Signals, that is Andreas' flagship editorial, my geopolitical piece, The Drill, and then our Friday portfolio update where we take a look at what's happened on the thematics that we cover in our macro model portfolio at Real Vision.

3:20So do check out the approach here for more on that at realvision.com. And as usual, a little reminder here, Andres. We try to be as actionable and concrete as possible, but our recommendations might be... Sometimes it may be good, sometimes it may be shit. That's the way it is, Andres. And speaking of sometimes maybe good, sometimes maybe shit, I'm an avid, I don't know if it's right to say follower, but at least observer of Andrew Tate. I'm very, very fascinated by the following he has, Andreas. And he has obviously been a very, very big Bitcoin guy. He has slipped his toes in finance once in a while.

3:59Now he has essentially killed our program, I'm afraid, Andreas. I want your take on it. He published his life hack. Since the US government is now selling 30-year bonds at 5%, you should simply take 50 million in cash and just buy bonds. That will pay you$2.5 million a year for zero work,$208 ,000 a month. And that's enough to cover basic expenses like a security team and cigar. I don't know what your monthly budget is for cigars and security team and dress. That's probably one of the good things of not living in Romania. But what's your take here? Is this the life hack we all waited for?

4:37Andreas Steno:well i i guess this classic example of uh the old discussion how to get rich right um the easiest way to get rich is to inherit the money or get 50 million in gas from out of the blue apparently here right because of course it's easy to earn money if you have 50 million so i don't really see the heck here to be honest but uh it could be seen as a sentiment indicator related to long bond yields in a sense, right? That all of a sudden, Andrew Tate is now aware that the 30-year treasury yield is above five, which is the first time for a while, right? So we had a lot of focus on that last week, right?

5:19Bond yields, they've trended in a nasty direction.

5:23Andreas Steno:The big question is whether it's an issue. And that's the point, Andreas, to get serious about this. When even Andrew Tate is posting about bond yields being high, was that what caused the the sell-off we saw on Friday and into Monday here, or how much impact does that have on investors in your opinion? Curious about online trading, but haven't taken the first step? You're not alone, and Plus 500 Futures is a great place to start. The futures markets are moving fast, and with Plus 500, you can explore popular assets like oil, gold, the S &P 500, Bitcoin, and more. From crypto to commodities, there's always something happening.

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6:40Andreas Steno:You know, the trillion dollar question right now is whether long bond yields carry the same significance for risk assets as they've typically had for decades. and I've spent a lot of time digesting that topic over the course of the weekend since we had this very nasty price action in bonds towards the end of last week. I'd like to start with just a very simple observation on page 10, Michael, because I've actually had this dialogue with quite a few of our professional investor counterparts, but also with various accounts on X, various people in my inbox, et cetera. So is it fair to assume that all of the conclusions that we've typically learned from the yield curve between, say, 1900 and 80 until 2020 still hold?

7:47Andreas Steno:now that we have a very different yield environment. I think the simple answer to that question is no, that you cannot just assume that all of the lessons that we learned over the past four decades still hold true now that the overall regime is pointing in the other direction for bond yields. And to take one but very important recent example of it on page 11, And we had the so-called inverted yield curve back in 2021, 2022. We had inflation spike. Central banks started hiking interest rates aggressively. So they brought short-term yields above long-term yields. And historically, once we've seen the so-called un-inversion of the yield curve, where short-term bond yields drop relative to long-term bond yields, it has been sort of a precursor of something nasty.

8:51Andreas Steno:We've typically seen recessions, say a year, year and a half after that. A couple of good examples of it right after year 2000, just ahead of the great financial crisis, we had similar uninversions of the yield curve. Those are the red vertical lines here in the chart. And we had nasty developments in markets. We had nasty developments in the economy after that. And I remember how everyone called for the same kind of development back in 2022 into 2023, where we had this on inversion, stating that, okay, now we have 12, 18 months left, and then the US economy will be in ruins, basically. None of it happened.

9:33Andreas Steno:So this otherwise very strong hit ratio signal of the U-curve simply didn't materialize. And maybe that's a very strong hint that you cannot just conclude that everything we've learned about how the yield curve impacts various assets, how the yield curve impacts the economy, is the same as it was during those four decades of falling bond yields on a trend basis. Now that we probably have increasing bond yields on a trend basis, maybe those conclusions do not hold anymore. And currently, we have a tremendous empirical study of this in Japan. We've obviously seen long bond yields going from close to zero to more than 3 % in Japan.

10:32Andreas Steno:And it's probably been the best era for Nikkei in decades, despite long bond yields going up and up and up and up and up and up. So why is that? Could it be that allowing yield curve to re-steepen is a kind of normalization of the price discovery that is actually positive for markets? I hold sympathy for that thesis, and I have a load of evidence of why that could be the case in my editorial today. Very interesting stuff. So check that out and read why this may be not the canary in the coal mine, Andreas. But if this isn't the signal we should be looking for, how about inflation, Andreas? We had a couple of quite hot prints last week.

11:17What do you make of them and how worried should we be about inflation right now?

11:22Andreas Steno:You know, initially, I found the trend to be pretty worrying, especially since we also – I mean, one thing was the hot consumer inflation report. Was it on Wednesday? And then we had the producer price inflation the day after, which was probably even nastier. Typically, you see the input cost inflation ahead of consumers actually feeling the heat. And we're starting to see some signs of inflation pressures that are pretty reminiscent of what happened in 21. So, I mean, we obviously should not discard that. earlier today, and I actually think this carries a bit of significance because it's the first research house I've seen calling for this.

12:11Andreas Steno:Remember Ed Yardeni, he wrote that, I quote him now, we expect the FOMC to signal a tightening bias at the June meeting of the Monetary Policy Setting Committee, followed by a 25 basis points hike at the July meeting. We cannot rule out more rate hikes over the rest of the year. I don't think I've seen anyone else calling for rate hikes in the US, especially given the backdrop that we just got the official confirmation of Kevin Walsh taking the job last week. So we now have allegedly a dove in place in the chairman seat. And now a couple of research shops are starting to cite the risk of hikes coming up in two or three months from now.

13:01Andreas Steno:Would be quite the ironic backdrop if Kevin Walsh entered the FOMC just as a hiking cycle was starting. I don't agree with the view, by the way, of Yardini here for a couple of reasons. I typically hate charts that strip out parts of the inflation basket. It's very easy to always say, okay, if you leave this and this and this and this and this out, inflation is nowhere to be seen. No inflation-induced cars, all is good. But if you look at the consumer inflation report we got last week, I just think it's easy to isolate the issue. Because if you leave out energy and buy products seen in food, you basically don't have a lot of inflation in that report.

13:58Andreas Steno:Especially if you leave out shelter as well, the so-called homeless basket, right? because shelter was sort of a technical one-off last week. Remember that the shelter category is a survey-based inflation measure. So they survey a panel biannually, so twice a year, about their rent development. And back in October of 2025, they didn't have the staff at work due to the government shutdown, so they couldn't collect this survey. So in the inflation report from October of last year, everything related to shelter costs was basically a zero because they didn't survey this panel. Therefore, six months later, April 2026, they surveyed them twice, in a sense.

14:46Andreas Steno:They doubled up the monthly contribution to account for that zero back in October. So that is obviously a technicality that led to more inflation than what is actually the case in April of 26. And therefore, if you strip that out, if you leave that out of the equation, and if you leave energy out of the equation for obvious reasons related to the Strait of Hormuz, you could still find excuses to stay soft on interest rates, in my opinion. and I think Kevin Walsh will jump on that opportunity. Having said that, I still hold the view that we need to see a resolution in the Strait of Amusei over the next couple of months to avoid interest rate hikes everywhere.

15:34Andreas Steno:Maybe that's the perfect bridge to allow you to talk a little bit about the hope that we actually got from the Iranian side for once today, Michael. Yeah, yeah, we're getting reports. Admittedly, I've been in recordings for the past two hours So I haven't read into details on most of it. But we do have reports that the US side is looking to relieve some sanctions. We're hearing positive signs about negotiations, a new deal from being brokered by Pakistan. So, Andres, the hope is that there is still a window to remedy the inflation situation by pulling out the driver of this inflation wave, essentially.

16:14And yeah, I still think there's a good chance. I think we all accepted that last week was about the Trump-She meeting. Now Trump is, I mean, even though he's doing 50 things at once, he usually focuses on one thing per week. And now hopefully we're back to the Iran war to get that settled, because that is essentially what we're all looking for. So a quick break in your regular programming. If you're serious about your future, grab my free report called Prepare for 2030. I think you've got five years to make as much money as possible. and this guide will help you navigate what's coming the link is in the description download it now so the big question here is obviously andreas if we do get a settlement within a few weeks and will that sort of restart the rally uh how much of an impact can impact can that have

17:02Andreas Steno:um at least i kind of sense the same fear now from from quite a few of the research houses and And the PMs out there, as I sensed towards the middle of March or thereabout, I constantly hear this notion that, oh, the tech rally cannot really go on since we don't have a lot of positives to take away from the global economy. And while that is admittedly true on the surface, everything that we see in relation to the growth momentum quite frankly across the board globally is much better than feared. For now, the reason why we're staying alive, to put it that way, is that China is on a clear bias strike in oil markets.

17:52Andreas Steno:They import more than 5 million barrels a day, less than what we typically see in the Chinese economy. On top of that, we obviously see these record export numbers and record fillings in U.S. harbots. So we certainly still have a couple of months left of decent momentum if the Chinese and U.S. cooperation on this topic is as solid as it is right now. And it's actually been a surprise to me. And a big kudos to you to read the tea leaves right ahead of this Trump-Xi meeting. At least sort of from a big picture perspective, that war, if you allow me to call it that, the war between the US and China is basically off the table for now.

18:39And it seems like both parties agree on, at least on the major things related to the strain of Hormuz and to the oil market overall.

18:52Andreas Steno:So when the biggest consumer of oil and the biggest producer of oil cooperates in that way, I actually think that we can keep the oil market in balance for longer than what most of the doomster energy pundits had expected. given everything that's ongoing in Iran. If you had told these energy pundits and energy hedge fund managers a couple of months ago that we're still trading around 100, they would have told you no, absolute no way, given that the Strait of Hormuz is closed. But I don't really see a strong sense of urgency in the oil market to strike a deal here, which is admittedly slightly worrying.

19:38The good news is that, and I've actually had a look at that earlier today, it seems like bond yields also matter a lot to the reaction function of the Trump administration.

19:50Andreas Steno:we've seen how Scott Besant has added pressure to alleviate some of the concerns surrounding Trump's very aggressive or hostile policy makes for markets once bond yields have gotten extreme and we're probably at that point again where he'll start to sound the alarm internally so I think we're seeing at least from the bond yield side we're starting to see the kind of pressure that is needed to force the US into making a deal as well. The question is, Andreas, because we're talking a little bit about Kevin Walsh. The whole idea was that when he entered office, there would be this huge political pressure to cut interest rates.

20:34We haven't really heard a lot about that, probably because Trump knows that he has essentially killed that plan with the Iran war, at least for now. But once he ends the Iran war, could that move back to center stage? Because the way I see it, it's the one thing he's lacking from this whole agenda. I mean, the terrorist war is more or less done. I don't know. He has some kind of truth with China. If he can end the Iran war, why shouldn't he move back to focus on cutting interest rates? Because that would be great ahead of the midterms, admittedly. Do you think there's any chance of that?

21:12Andreas Steno:You know, at least as long as the decomposition of inflation looks, the way it does, we can very easily go back to discussing rate cuts if we get a resolution to the straight-up moves. So take the example of last week again. If we get sequential negative contributions in nominal terms from energy to month in and month out from August and until the midterms, then inflation will not really end up being a worry, right? So it all depends on the straight of the moves and whether you can get energy prices down in time for the midterms. I still think you can. And that is one of the, you know, I've had plenty of discussions on this exact topic with many of the energy experts out there.

22:08Andreas Steno:and what they what i think they struggle with is you know i fully understand that for example the oil market or any other commodity market for that sake is a physical market by the end of the day right so you you cannot really manipulate the the dated market right because you you obviously need the fuel right so it's not like it's a paper market that you can manipulate uh to some extent You can manipulate a futures market. But what I keep telling them is that as soon as the root cause of the initial worry is gone, the market will move on. And the best example of that is late March, early April, where we got that move towards ceasefire in Iran.

23:03Andreas Steno:um we certainly didn't have accelerating concerns around geopolitical risks uh sort of on a weekly basis instead we have we had the opposite right it was kind of a de-escalation um without of course getting at the the ultimate deal in place and that was also the exact point where we started to see any new worries uh recede we started to see NASDAQ rebounding and here we are I don't know 35 % later with one of the fiercest rallies in modern history amidst the war right so I cannot I've lost count of the amount of insults I received when I said that the rate of change is what matters also in oil markets but it does and you know the best empirical evidence of that has basically been the way the market has behaved over the past six to seven weeks.

24:05So, Andreas, a question here from a user called or a viewer called Kavi79, which sums things up very beautifully. That's all very often the beauty of listening questions here. Good afternoon, gents. Could you comment on whether it's time to take some profits in semiconductors? That's a good way of wrapping up your view on the immediate situation, Andreas.

24:27Andreas Steno:Let me put it like this. Obviously, we shouldn't rule it out. But I think it's an even more popular view to say that it's time to take profits in semiconductors than it is to be long semiconductors. I don't think anyone is willing to say no to that question outside me. Everyone is saying that you should take profit in semiconductors. But I have this very simple rule that I'm not going to take profit in that trade until I see an issue in the economic data from Korea. Because that's essentially the best real-time gauge you have of demand in the semiconductor space. And it will be very interesting to see the first 20 days of the month.

25:15It will be released, I think, on Wednesday morning, right?

25:18Andreas Steno:the export data from the first 20 days of the month, but we received the data from the first 10 days of the month, which looked incredible. So I think it's as simple as that. I mean, if there's still an accelerating demand side on this, then why? I don't know when this ends, but I know what to watch, and South Korean data is basically what I watch. sometimes I think I'm blessed I'm a political science major the only economics I had at university was a course on supply and demand that's it, it ended there I had decent rates on that but the demand is there that's all I understand the demand is there, the demand is accelerating we saw that in all the earnings reports so I don't really see a reason for this unless you're extremely short-sighted and you need to buy a car this fall or whatever I mean, yeah.

26:17And Andreas, that just leaves us with a few minutes to open up a complete Pandora's box. But one that I've been wanting to open for a while and that I'm very, very eager also to get the discussion going on on the Real Vision platform with all the great users in there. Because you sent me this. I don't know if you went to the congress.gov website and looked. That's something I usually do. Look at bill proposals from the U.S. Senate. Committee on Commerce, Science, and Transportation. But Bernie Sanders, Bernard Sanders, the senator from Vermont, introduced a bill on Artificial Intelligence Data Center Moratorium Act.