Macro Warning Signs Hint at U.S. Bear Market Setup for 2026

TLDR:

• Rising liquidity stress and inflation pressure could shape U.S. market conditions heading into 2026.
• The Fed’s Financial Stress Delta and FSI are showing early signs of tightening in credit conditions.
• A strong U.S. dollar continues to restrict global liquidity, weighing on risk-heavy asset classes.
• Inflation trends above expectations may trigger tighter policy, affecting investor sentiment and growth.

Markets rarely fall without warning. Subtle shifts in liquidity, inflation, and credit stress often appear before the slide begins. Analysts are now watching several macro metrics that could signal what comes next for U.S. equities. 

According to financial analyst Joao Wedson, new data patterns reveal early tension in the system, suggesting that 2025 could set the stage for potential turbulence ahead. The discussion centers on whether these indicators could foreshadow a U.S. bear market in 2026.

Liquidity and Stress Indicators Raise Caution

Wedson shared his analysis on X, outlining key data points that have historically moved before major downturns. 

One of the metrics he cited was the Fed Financial Stress Delta, which tracks the yearly change in the Federal Reserve’s Financial Stress Index. It measures how much pressure or relief has built across markets over the past year.

When this stress delta rises quickly, liquidity tightens and credit spreads widen. These conditions often make borrowing tougher, creating cracks in the financial system before equity markets feel the strain. 

Current readings are not alarming, but the pace of change is drawing attention.

The broader Financial Stress Index (FSI) adds another layer to this picture. It aggregates 18 financial indicators, including yield spreads and liquidity conditions. Historically, when the FSI climbs above zero, stress levels exceed normal ranges, often preceding market corrections.

Analysts say the index remains below that threshold for now, though subtle increases point to building pressure. These early moves often go unnoticed until the effects start to ripple across asset classes, including crypto and equities.

Dollar Strength and Inflation Dynamics Shape the Outlook

Another data point on Wedson’s radar is the Trade-Weighted U.S. Dollar Index (Broad), which tracks the dollar’s strength against global peers. 

A stronger dollar often tightens global liquidity and weighs on risk assets. Conversely, a weaker dollar tends to support recovery phases, as seen after previous corrections.

Recent months have shown mixed signals in the dollar index. While the U.S. currency remains firm, its upward momentum appears to be slowing. Traders are now watching whether a reversal could shift capital flows back into higher-risk assets like tech stocks and crypto.

Wedson also drew attention to the relationship between inflation and market expectations, comparing the Consumer Price Index (CPI) year-over-year with the 10-year breakeven rate. 

Persistent inflation above expectations usually forces tighter monetary policy, cooling investor appetite. Current data shows inflation holding slightly above long-term expectations, a trend that could intensify if energy prices stay elevated.

These indicators together form a backdrop that suggests caution for the next 18 months. While none are flashing crisis-level warnings, early tension is emerging in liquidity and inflation data. 

Wedson said the real test could come in 2025, setting up the environment for what might unfold in 2026.

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