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* FIEND'S SUPERBEAR MARKET REPORT *

* July 24, 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 Market Is Tightening Without the Fed

Thursday finally brought several of 2026’s contradictions together in one ugly session.

Brent crude did not merely move above $90. It settled at $100.69 a barrel, while WTI finished at $92.19. The Nasdaq dropped 2.2%, the S&P 500 lost 1.2%, and the Dow fell more than 500 points. Tesla plunged roughly 14%, Alphabet lost 7%, and Treasury yields pushed to their highest levels in more than a year.

This was more than another bad day for stocks.

It was the market beginning to impose the tightening that the Fed has spent months discussing but has not yet delivered.

The Second Oil Shock Has Less Protection

The first oil shock of the year was eventually suppressed with emergency reserves, improvised shipping routes, government assurances and repeated promises that peace was just around the corner.

Those promises are gone.

Normal passage through the Strait of Hormuz is again heavily restricted, and Iran’s Revolutionary Guards say ships cannot pass without coordinating with Tehran. The alternative route through the Red Sea is now under attack as well, with the Houthis claiming strikes against Saudi tankers and threatening a blockade of Saudi shipments. The two chokepoints together normally handle roughly one-quarter of global oil flows.

That is why oil moved seven dollars in one day instead of merely creeping higher.

The safety cushion is also much thinner than it was several months ago. The U.S. Strategic Petroleum Reserve has fallen to approximately 311.4 million barrels, its lowest level since March 1983. It has lost more than 104 million barrels since the war began, while combined U.S. strategic and commercial inventories are near their lowest level since 1984.

Global reserves are under pressure too. Reuters estimates world oil supply is running about 9.4 million barrels per day below prewar levels, while emergency stockpiles have been rapidly drawn down. The first reserve release worked because governments had stored oil available. The problem is that those barrels cannot be released twice.

Strategic reserves do not create energy. They move energy from the future into the present.

That bought time earlier in the year. It did not solve the Strait, rebuild damaged infrastructure or create a diplomatic settlement.

Gasoline prices had started moderating when crude fell toward $70. That relief is now reversing. Even worse, diesel, jet fuel and other refined products may rise faster than crude because the global refining system is already strained. A prolonged period around $100 oil would feed directly into transportation, food, freight, utilities and consumer expectations.

This time, there is less room to call the shock temporary.

The Bond Market Has Already Hiked

The Fed has not raised rates yet, but the economy is already experiencing higher rates.

The 10-year Treasury yield climbed to approximately 4.71%, its highest level since January 2025. The 30-year moved into the 5.15%–5.20% area, while the 20-year was also above 5%. The next major line for the 10-year is 5%, and it is no longer very far away.

That affects far more than Treasury traders. It raises mortgage rates, corporate refinancing costs, private-credit borrowing costs and the government’s interest bill. It also challenges the valuations of the technology stocks that have been carrying the market.

The Fed can leave its official rate unchanged next week.

The economy will not experience unchanged rates.

CME pricing now gives roughly a one-in-three chance of a hike at next week’s meeting, up from about 12% only a week ago. The probability of at least one increase by year-end has moved above 90%. One oil spike and one unusually strong claims report transformed the market’s outlook almost overnight.

Those predictions remain unstable. Another weak employment report could knock them down just as quickly. But the important message is not whether the Fed hikes next Wednesday. It is that investors are demanding greater compensation to hold long-term government debt regardless of what Warsh does.

If the Fed hikes, it risks accelerating the slowdown and breaking leveraged markets.

If it holds, the long end may keep rising because investors conclude the Fed is falling behind inflation again.

If it eventually cuts into high inflation, the bond market could punish that even more severely.

There is no easy door left.

The Balance Sheet Still Points the Other Way

The optics become even worse when the Fed’s balance sheet is considered.

Despite the hawkish rhetoric, the latest H.4.1 report shows Reserve Bank credit rising by about $1.8 billion during the week, securities held outright increasing by roughly $2.2 billion and Treasury holdings climbing by approximately $5.7 billion. The Fed describes the Treasury purchases as reserve management rather than QE, which is technically fair. But the direction is still the direction.

The Fed’s own review says total assets increased by about $49 billion over two quarters, largely because Treasury purchases resumed to maintain ample reserves. Again, this is not the enormous emergency QE of 2020. But neither is it balance-sheet tightening.

That leaves the Fed talking about higher rates while quietly adding Treasury securities.

Wall Street may distinguish between monetary stimulus and reserve management. The bond market may simply see a central bank that is unwilling to meaningfully drain liquidity while inflation remains far above 2%.

The Fed is trying to sound like Volcker while maintaining Greenspan’s plumbing.

That contradiction becomes harder to sustain when oil is above $100.

Tariffs Return at the Worst Time

As if the energy shock were not enough, Trump has restarted the tariff campaign.

The administration announced tariffs of 10% to 12.5% on imports from 60 trading partners, replacing the temporary global tariff that was about to expire. The duties cover nearly all U.S. imports, although oil, gas, fertilizer and some food products are exempt. Canada is already facing a separate 50% tariff action on a broad group of products.

Tariffs disappeared from market discussion when the war took over the headlines. They did not disappear from the cost structure.

Higher energy prices raise the cost of producing and transporting goods. Tariffs raise the cost of importing them. The two policies are now working in the same inflationary direction.

Wall Street will undoubtedly argue that the oil spike is temporary and the tariffs will be absorbed. That may be possible for a month. It becomes much harder if companies face rising freight, fuel, financing and import expenses at the same time.

The Fed is being asked to ignore each inflation source because each one has a convenient explanation.

Eventually, enough temporary inflation becomes persistent inflation.

The Technology Bubble Is Losing Air

The selloff in technology was not only about oil or interest rates.

Tesla and Alphabet both reported negative free cash flow as capital spending surged. Alphabet’s cloud business grew rapidly, yet investors focused on the company’s first quarterly cash burn since it became public and its plan to spend roughly $195 billion to $205 billion this year. Tesla also burned cash while more than doubling capital expenditures for robotics, autonomous vehicles and AI infrastructure.

This is the point where the AI story changes.

For years, Big Tech was prized because it produced enormous amounts of cash with relatively little incremental capital. Now the same companies are spending hundreds of billions on chips, data centers, electricity and equipment whose ultimate returns remain uncertain.

The technology may be revolutionary. The financing is becoming old-fashioned.

SpaceX is the cleanest example of speculative air leaking out. The stock reached an intraday high of $225.64 after its IPO but recently fell as low as $115.26, below the $135 offering price. Short sellers are now sitting on an estimated $15.5 billion in paper profits.

A roughly 49% decline from the high does not prove that SpaceX is a bad company. It proves that a wonderful story can still be a terrible purchase at the wrong price.

Tesla, Alphabet and SpaceX are sending a similar message: investors are beginning to ask how much these futuristic ambitions cost and how long they will take to produce enough cash to justify the valuation.

The bubble has not burst completely.

But it is no longer expanding without resistance.

No Good Choices

The Fed enters next week’s meeting with the worst combination possible:

Oil above $100.
Tariffs returning.
Long yields near multi-decade highs.
Inflation still above target.
Technology valuations under pressure.
A war expanding across two vital shipping corridors.
A balance sheet that is still edging higher.

A quarter-point hike would not reopen Hormuz, stop the Houthis or reduce tariffs. It would, however, put more pressure on housing, credit and stocks.

Holding steady would avoid an immediate shock, but it could encourage the bond market to keep raising borrowing costs on its own.

Cutting is not remotely credible now unless something breaks—and if something does break, the Fed may discover that easing policy no longer guarantees lower long-term rates.

That may be the most important change in the market.

For years, investors assumed the Fed controlled the cost of money.

Now the long bond is taking control.

Thursday’s losses may produce another reflex rally. That has happened repeatedly throughout 2026. But oil above $100, the 10-year above 4.7% and the 30-year above 5.1% represent a different kind of pressure than another war rumor or disappointing earnings report.

The Fed has not tightened yet.

The market already has.

And if the 10-year reaches 5%, Wall Street may finally discover that the bond market does not need Warsh’s permission to end the party.

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