3Q26 sitrep

Last time I posted sitrep in 1Q21 (FXI peak, and 3Qs later we had SPX/GOLD peak, but this 3Q26 sitrep is a continuation of this topic.

The crossroad – market needs to decide what to do as it is heavily cracked.

Sitrep is published very rarely (first time since 5Ys+) and its main task is to give you a bigger level of warning ahead as more parts of the market keeps collapsing (and once 10y/3m will jump +300bps post inversion we’ll be talking about recovery).

In reality since May 2025 nothing has been changed. We keep dancing around key GOLD ratios, but what is more important is what’s bond market doing…

I bet : we’ll see 100bps hikes first

Here’s why I think so…

1/ US02Y managed to break (M)MA50 with next target 5.20%

Normally it should work this way : US02Y retesting (M)MA50 and market crashes, 10Y/3M uninverts using bull steepening, but this time it looks like inflationary spike will arrive and last a bit longer to destroy the economy while 10Y/3M uninvets using bear steepening?

2/ US03MY has (M)MA50 retest from the bottom : +100bps higher from FFR on 4.50%.

My main thesis about market peaking is based on US03MY breaking down (M)MA50 when 10Y/3M uninverts what happened in 4Q25, but nobody knows how much time we have to spend below this (M)MA50. In our case (M)MA50 sits around 4.50%

Remember if US03MY breaks > (M)MA50 we can call it 1999 year. You see previously 2022 aka October 1999 moment.

3/ 10Y/3M

The problem right now is : 10Y/3M is +93bps post uninversion, while in 2022 we had oil 120$ peak + AI boom has arrived. That moment has stopped “the cleaning process” and managed to crash 10y/3m down. There’re plenty of sexi-flexi explanations about yield-curve but here’s the simple one I share with you

During economic cycle which starts around 10Y/3M > +350bps yield-curve needs to flatten until inversion hits. Each steepening during this process we have correction in a stock market. Once a set of yield-curves uninvert, the cycle comes to an end. Uninverting yield-curve causing real troubles which you won’t predict, but they’re guaranteed, and their level is proportional to how deep and long this inversion occured.

That’s why you can clearly see why we have so many RECORDS on macro data, because this inversion is more powerful than the one in 1929. It’s like 2000+2008+2020 combined.

The higher it’ll go the more problems will be released by the economy. We have tariffs, Trump, Iran’s war, fuel shortages, war in Ukraine, breaks in F/X land like currencies are the lowest ever vs $$$. Diesel breaks to new ATHs, consumer sentiment, corruption levels, bond market breaking to new ATLs and probably I can that for a longer period of time. Anyway you’ll see record amount of problems.

4/ Long end US30Y looks terrible with a big break and possible 6%+ target.

5/ DXY tries to stay in its trend

Market tries at any cost to blow it away from key levels, but IMO the longer it slides on the trend above (3M)MA50 (red) & (3M)MA200 (blue) the higher possibility it’ll blow to the upside like a rocket.

6/ Diesel made a huge break

And it confirms the break in bond market yields. What is a reason behind it – doesn’t matter (scarcity?). Market so far thinks : Inflation = economy grows.

7/ SPX/GOLD awaits for its permanent (3M)MA200 break again

I still treat this 4Q25 (3M)MA200 break as a base case, because even in 1973 we had similar try to get away from the problems which FAILED. DJI/GOLD has gone long time ago and can’t even touch this (3M)MA200 again, so we’re going to concentrate on this chart only. Look how 1929 worked exactly the same as 1970s, because GOLD is not a hedge against inflation. GOLD is a hedge for a BIG CYCLE change. Since 2011 we had economic dead-cat bounce, based on raising wealth inequality and sucking bottom 90% from everything until 4Q21 and now the big cycle tries to close itself the moment it’ll move down from (3M)MA200 for the 5th time in history and each time we had the worst economic problems.

You clearly see that GOLD outperforms stocks since 2000 and IMO it’ll outperform stocks another 2-10 years from now. If you’re long term investor since 2000 in reality you shouldn’t stay in stocks, because it’s still just the beginning.

Summary :

Looks like we’re still waiting for “AFTER INTEREST RATE SPIKE” – oil shortages + diesel prices + energy crisis will ignite the spike up of rates when credit contracts. You can clearly see how BIG CYCLE moves on finished in 2021 and how problems piling up to match exactly those points from transition period.

I’ve said many times that BIG CYCLE moves itself and events will always arrive in a function of just GOLD ratios (SPX/GOLD, DJI/GOLD) breaks + uninverting mostly 10Y/3M (problems dependent on the level of its inversion and how long this inversion lasted).

I must admit I’ve never thought this will take so so so much time, but this time was bought by record ever inversion = record ever problems once they’ll be released.

My idea that 2026 is the year the economy enters great depression 2.0 is still valid and unchanged until both DJI/GOLD & SPX/GOLD will be going lower post (3M)MA200 break, and this 10Y/3M record inversion confirms still this thesis.

Also based on those GOLD ratio charts my prediction : Iran will win this war vs USA is still unchanged. Once both DJI/GOLD & SPX/GOLD moves lower = Iran starts to build its power in Middle East region as US lost trust, lost power, moved everybody towards Chinese hands, Chinese financial system and $$$ will at some point of time spike like oil and diesel and that’ll be its last move once it’ll become a worthless piece of paper and USA will end its global hegemony officially losing with way weaker country, but better prepared.

Another interpretation :

Declining DJI/GOLD & SPX/GOLD = USA losing power in the world in this progressing BIG CYCLE change.