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* FIEND'S SUPERBEAR MARKET REPORT *

* September 3, 2026 *

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* e-mail: fiendbear@fiendbear.com *

* web address: http://www.fiendbear.com *

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Fiend Commentary
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The 10-Year Knocks on 5%

Wednesday brought a modest rebound in stocks and a much more important test in the bond market.

The 10-year Treasury yield briefly reached 4.814%, while the 30-year pushed toward 5.29%. Both backed off their highs later in the session, helping gold, silver and the mining shares recover from their recent beating. Gold rose about 1%, silver nearly 2%, and the miners did even better.

That leaves the 10-year less than 20 basis points from 5%.

Wall Street has managed to ignore a 30-year Treasury above 5% for months. A 10-year Treasury with a 5-handle may be considerably harder to dismiss.

Five Percent Changes the Conversation

The 10-year is the benchmark for mortgages, corporate borrowing, commercial real estate and much of the financial system. At 4.8%, it is already exerting considerable pressure. At 5%, bonds begin competing much more visibly with stocks while increasing the discount rate applied to future corporate earnings.

That is particularly uncomfortable for an equity market still carrying fantastic valuations in AI and technology.

A 5% Treasury does not guarantee a stock-market crash. The 10-year briefly crossed 5% in 2023 without ending the world. But today's backdrop is different: federal debt has crossed $40 trillion, long yields are already near two-decade highs, oil is surging again and the Treasury has already demonstrated discomfort by expanding its bond-buyback program.

The attempt to restrain long rates has accomplished very little. The 30-year is back around the same levels that prompted Washington to announce larger purchases in the first place.

The bond market keeps coming back with the same answer: if Washington wants buyers for this much debt, it is going to have to pay them.

ADP Gave Warsh Another Excuse

Wednesday's ADP report offered the first crack in Kevin Warsh's rejuvenated rate-hike story.

Private employers added only 38,000 jobs in August, below expectations for about 48,000 and the slowest pace since January. Manufacturing lost 17,000 jobs, while professional and business services lost another 16,000. Factory orders were somewhat better, rising 0.9% in July, although underlying core capital-goods orders were flat.

None of this proves Friday's government employment report will be weak. ADP has a long history of failing to predict payrolls precisely.

But it certainly does not strengthen the case for a September hike.

The market had pushed the probability of a quarter-point increase toward 70% after Warsh's Jackson Hole speech and the latest oil spike. After the soft ADP number and the retreat in yields, those odds eased back toward the mid-60s.

Here we go again.

A few weeks ago September was supposedly nearly certain. Then weak employment and decent inflation reports pushed the odds toward 30%. Warsh talked tough at Jackson Hole and the probability surged again.

Now the economic data get another vote.

Friday could undo much of Warsh's speech in one morning.

A Weak Jobs Report Creates the Worst Setup

The consensus expects only modest payroll growth Friday. If the report is genuinely weak—particularly if unemployment rises or previous months are revised downward—the Fed will face exactly the combination it does not want.

Employment weakening.

Inflation still above target.

Oil around $90.

Long-term yields near multi-decade highs.

A president openly demanding lower rates.

And midterm elections only weeks away.

Under those circumstances, a September hike becomes very difficult to imagine.

Warsh can correctly argue that inflation remains too high. He can point to oil and tariffs. He can repeat that the 2% target is firm.

Then someone will ask why the Fed is raising rates into a labor market that just lost momentum.

That is the WACO test again: Warsh Always Chickens Out.

If payrolls are strong Friday, Warsh will have fewer excuses. If payrolls are weak, the September hike can disappear without him technically abandoning his hawkish rhetoric.

He can simply say the Fed needs more data.

October becomes the next meeting.

Then December.

The supposedly inevitable hike can keep moving down the calendar until there is no calendar left.

The Metals Know the Routine

Wednesday's metals rebound looked like a smaller version of the pattern we saw throughout August.

Gold fell to almost a one-month low early in the session before recovering above $4,370. Silver bounced from roughly $63 to above $65, while the GDX gold-miner ETF recovered about 2.4%.

The immediate catalyst was the modest retreat in yields and the weaker ADP report.

The larger thesis has not changed.

Metals were smashed when markets decided Warsh was going to become a genuine inflation hawk. They rallied when that belief faded. Jackson Hole temporarily restored the hawkish story, and gold and silver were hit again.

Friday could reverse it again.

A weak employment number would probably knock down September hike expectations, weaken the dollar and help the metals. The first reaction in Treasury bonds would likely be lower yields as traders remove Fed tightening. The more interesting question would come afterward.

Would the long end stay down?

If the two-year yield falls sharply while the 10-year and 30-year yields refuse to follow—or quickly rebound—that would be another warning that the bond market sees Fed softness as inflationary rather than reassuring.

That would be an especially powerful setup for gold.

The metals do not necessarily need rate cuts.

They need markets to conclude that the Fed will tolerate inflation rather than risk recession.

Oil Has Already Moved Into the Next Tier

The oil situation is becoming harder to describe as an $80-to-$90 trading range because crude is already testing above it.

Brent settled Wednesday at $95.63, while WTI closed at $91.01. The conflict is now in its seventh month, tanker traffic through Hormuz remains severely restricted, and only four vessels reportedly passed through Wednesday compared with a recent 10-day average of thirteen. U.S. commercial crude inventories also fell by 4.5 million barrels last week.

The new range may be closer to $90–$100.

A break above $100 would change the discussion immediately.

Gasoline prices would rise heading into the fall.

Diesel and heating-fuel concerns would grow ahead of winter.

Headline inflation would begin climbing again.

Consumer confidence would take another hit.

And the political pressure on Trump would become intense just before the midterms.

The strategic reserve has already been heavily drawn down, which makes another prolonged price spike more difficult to suppress. Reports this week showed another SPR release even as commercial inventories declined.

The first oil shock could be handled with emergency barrels.

The next one starts with fewer emergency barrels available.

That matters.

The Fed Could Lose Either Way

Friday's employment report presents an unusually nasty asymmetry.

A strong report could push September hike odds back above 70%, send the 10-year toward 5% and put renewed pressure on metals and highly valued stocks.

A weak report would probably crush the September hike probability and initially support stocks and metals. But it would also tell us that the economy is weakening while oil and inflation remain elevated.

That is hardly a Goldilocks outcome.

The Fed would be stuck on hold not because inflation was defeated, but because the employment side of its mandate had deteriorated too much to risk another increase.

The long bond could see straight through that.

This is why the current bond selloff is so important. Yields have not been rising because investors are convinced the Fed will aggressively tighten. They have been rising because the market increasingly questions how inflation, massive government borrowing and future Fed accommodation can coexist without requiring a higher return.

Warsh can move the two-year Treasury with a speech.

The 30-year requires something more convincing.

The Lid Is Getting Hot

Stocks bounced Wednesday, and the major averages remain remarkably close to record territory. The market still assumes that every problem will be manageable: oil will eventually fall, the Fed will avoid doing too much, the economy will avoid recession and AI earnings will keep supporting valuations.

That may continue working.

But the room for error is shrinking.

A 10-year Treasury at 4.8% is not normal background noise. Neither is Brent at $95, $40 trillion in federal debt or a labor market adding only 38,000 private jobs.

Friday could push the September hike back toward certainty.

Or it could knock it almost completely off the table.

My guess remains that a September hike never happens. If Friday's employment report is weak, the market may begin reaching the same conclusion again.

The metals would probably welcome it.

The dollar would not.

And if the 10-year keeps moving toward 5% even after the Fed-hike story fades, Wall Street may finally have to pay attention to the market that has been warning it all summer.

The Fed can chicken out.

The long bond doesn't have to.

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