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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                December 8, 2025                           *

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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 Cut That Won’t Calm the Long End

PCE landed as expected—and still well north of the old 2% anchor. A cut this week is essentially priced. Yet the important tell isn’t at the front of the curve; it’s the 10-year grinding higher again. The market has treated ~4.0% as support and is probing 4.10–4.15% resistance. A push toward 4.25–4.50% is very much in play.

That’s the contradiction in plain sight: rate cuts + QT ending + QE on the horizon, and metals rising—while the long end refuses to ease. Translation: the policy impulse is dovish, but term premium and credibility costs are doing more work than 25 bps can undo. Stocks can cheer the cut; gold and silver are pricing the bill for it.

What to watch this week

  • Long end, not the dots: If the 10Y holds above ~4.10%, equity multiple expansion stays capped; a quick run at 4.25–4.50% would say “the bond market veto is alive.”
  • Metals’ behavior, not headlines: Calm trade with gold >$4k / silver >$50 means insurance demand, not a blow-off.
  • Auction tone & credit spreads: Clean supply keeps the drift benign; sloppy tails or wider HY spreads would turn dips into de-risking.

2026: Three clear paths (no weasel words)

1) Stagflationary easing (base case ~50%)

  • Setup: Inflation averages ~2.8–3.4%, Fed funds drifts below inflation after more cuts, QT is over, balance sheet edges higher.
  • Tape: Gold >$4.5k at some point, silver in the $60–$70 range; miners keep leadership on pullbacks. 10Y ranges 3.8–4.8% with risk spikes on heavy issuance.
  • Equities: Positive but uneven returns; breadth stays patchy, high-duration winners lag; value, cash-flow compounders, and resource names outperform.

2) “Disinflation accident” (prob ~30%)

  • Setup: Growth air-pocket; labor softens quickly; credit tightens.
  • Policy: Faster cuts + explicit balance-sheet support.
  • Tape: Equities down 10–15% from current peaks before stabilization; gold volatile but higher floor; 10Y dips toward ~3.5% briefly as the curve steepens on recession risk.

3) Soft-landing sequel (prob ~20%)

  • Setup: Data cools without cracking; productivity from AI spend shows up with a lag.
  • Tape: Equities grind higher mid-single-digits; metals consolidate at high plateaus instead of sprinting; 10Y 3.8–4.3%.
  • Tell: Better breadth, smaller gap between equal-weight and cap-weight indices.

Positioning implications (actionable, not academic)

  • Respect the long end. Use 4.10–4.15% on the 10Y as your near-term risk rail; a break higher argues for selling strength in high-duration equities.
  • Keep the insurance bid. Maintain a core metals sleeve; treat spikes as trim opportunities, dips as reloads while policy stays easier than prices.
  • Favor cash flow over promise. Balance sheets first; avoid models that require cheap capital to work in ’26.
  • Barbell: high-quality value + a measured resource/miners sleeve; keep dry powder for any disinflation shock.

Bottom line: A cut with PCE still near ~3% is not “stimulus;” it’s negative real rates with a term-premium tax. That’s why the long end and metals can rise together. If 10Y presses through 4.15% and auctions aren’t friendly, expect equities to lose altitude while hard money keeps the initiative. If the long end relents, December can glide—but 2026 will still be priced in credibility, not comfort.

 

 

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