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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                 March 20, 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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No Cuts, Maybe a Hike… in a Slowing Economy?

Thursday’s selloff in metals and miners wasn’t really “about gold” or “about silver.” It was about expectations breaking. The market has spent months leaning on one big assumption: the Fed would be forced to keep easing as the economy cools. Now, almost overnight, that assumption has been challenged.

Interest-rate pricing has swung from “multiple cuts” to “no cuts,” and even to a non-trivial chance of a hike by year-end. Depending on which slice of the futures/options market you look at, the implied odds of a 2026 hike have climbed into the “one-in-five” neighborhood—an astonishing pivot for a market that was previously cheering for easy money as the default setting.

So why did metals get hit? Because the one thing that can interrupt a precious-metals stampede is a sudden repricing of real-world constraints:

  • If the Fed can’t cut, liquidity isn’t as cheap as the crowd hoped.
  • If yields drift higher while the dollar firms, leveraged “risk-on” trades (including miners) can get liquidated fast.
  • And when positioning gets crowded, price falls first and explanations come later.

Meanwhile, the macro picture is getting uncomfortable in a different way.

GDP and employment are no longer confirming the “everything is fine” narrative. Growth has been revised lower, and the labor market has shown more wobble than the headline rhetoric suggests. Even if layoffs aren’t exploding, hiring momentum has cooled and the economy looks increasingly vulnerable to the next shock—whether that’s higher energy costs, tighter credit, or simple consumer fatigue.

That puts the Fed in the classic no-win box:

  • Inflation pressure is not behaving like a well-trained pet.
  • Growth is losing altitude.
  • Markets still want relief.

Here’s the twist: the Fed balance sheet is already creeping higher again even as policymakers insist “this isn’t QE.”

Call it “reserve management,” call it “liquidity operations,” call it whatever you want—the practical effect is that the Fed is quietly adding some fuel back into the system while trying to avoid saying the words that would spook inflation expectations. That’s why investors are suspicious. When the balance sheet starts rising, markets instinctively ask: “Is this the early stage of the next rescue?”

Now to the key question: do we really believe the Fed will let the economy sink without cuts in an election year—especially with Powell likely out as chair in a few months?

Here’s the hard, unsatisfying reality: the Fed can try to project independence, but it can’t ignore a downturn forever. The only real debate is how it responds.

My view:

1.     If inflation keeps percolating (and energy prices and tariffs don’t help), the Fed will be extremely reluctant to cut in a “clean” and obvious way. They’ll fear re-lighting the inflation fire they claim they’re trying to control.

2.     If the economy deteriorates anyway, the response is more likely to come first through “plumbing” and liquidity measures (balance-sheet tools, facilities, backdoor easing) rather than headline rate cuts—because it looks less like surrender.

3.     If financial conditions snap (credit spreads widen, funding stress returns, or markets disorderly-sell), then rate cuts come back onto the table fast—election year or not. The Fed’s true red line has always been systemic stability.

The risk for 2026 is that we’re drifting toward a regime where policy becomes reactive and inconsistent: “tight talk” to protect credibility, paired with “quiet liquidity” to keep the machine running. That is not a stable mix. It can keep markets levitated for a while, but it also feeds exactly the kind of skepticism that drives people toward hard assets in the first place.

Bottom line for Friday: Thursday’s metals break wasn’t the end of the story—it was the market reminding everyone that the trade is not one-way. If the Fed really tries to hold the line into weaker data, volatility rises. If the Fed blinks, the dollar and inflation expectations become the problem again. Either way, the easy-credit era is no longer a smooth ride.

What to watch next week (the “tell” list):

  • Whether yields keep grinding higher even on soft data (a warning sign).
  • Whether the dollar’s bounce holds or rolls over again (a confidence gauge).
  • Whether the Fed’s balance sheet keeps rising despite “no QE” messaging.
  • Whether metals stabilize on bad news (bullish) or keep breaking on good news (bearish).

 

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