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LivestreamMenuBond yields pushed higher this week, reminding one bond strategist of a dark time on Wall Street. The 30-year Treasury bond yield topped 5.3% this week, hitting levels not seen since 2007. The benchmark 10-year Treasury note yield climbed as high as 4.748%, its highest level since January 2025. In 1987 — the same year the S & P 500 and Dow Jones Industrial Average suffered their biggest one-day declines in history — the 30-year bond yield sailed to a high of 10.24% after beginning the year below 7.5%. The 10-year also topped 10% back then. Both rates ended 1987 below 9%. “There’s analogs to what happened during the 1987 time period,” said George Goncalves, head of U.S. macro strategy at MUFG Securities. “You’re getting paid a decent yield now for the first time in a long time. So, [there’s] that, plus the risks around stock market valuations, and that’s why the 1987 comparison is out there,” he said. Both the Dow and S & P 500 were headed for weekly declines on Friday. However, The former was just 2.9% below an intraday record of 54,744.33 reached on Aug. 5. The S & P 500, meanwhile, was less than 2% off its Aug. 13 peak of 7,816.70. And while the S & P 500’s trailing 12-month price-to-earnings ratio has declined to around 26, it remains near the 29.24 multiple reached earlier this year, its highest since 2021. Yields around the world are also trending higher, largely due to concerns that elevated energy prices linked to the Iran War could fuel inflation. Rates are also moving higher as companies issue more debt to fund their outsized artificial intelligence investments, creating more competition for capital. To be sure, today’s bond market isn’t identical to that of 1987, and several of the underlying conditions that led to Black Monday are not currently at play. Additionally, Treasury yields are far below their levels 39 years ago, and the fact that they have jumped does not necessarily signal that the stock market will crash again. History is likely to repeat itself, however, in the sense that investors could flock to bonds as they did in 1987, according to Goncalves. That’s because stocks are once again richly valued while bonds are super cheap on a relative basis. “Rates actually went up first, and then people then saw ‘oh look, bonds are more attractive than stocks,’” Goncalves said. “I think that’s going to start to kind of come into the fray. [There’s been] this idea that people are shunning bonds, and they might actually start to gravitate towards them if rates stay high because it’s going to be like an alternative.” — CNBC’s Deena Zaidi contributed reporting.Read More
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