The 30-year Treasury bond yield climbed to 5.3% over the course of the week, reaching a level last recorded in 2007. The 10-year Treasury note yield reached 4.748%, a peak not seen since January 2025.
During 1987, the 30-year Treasury yield rose from under 7.5% at the beginning of the year to a high of 10.24%, a stretch that overlapped with the S&P 500 and Dow Jones Industrial Average posting their largest one-day percentage declines on record. The 10-year yield also crossed the 10% threshold during that period. By the close of 1987, both figures had fallen under the 9% threshold.
According to MUFG Securities' head of U.S. macro strategy, George Goncalves, parallels can be drawn between current conditions and the market environment of 1987. He observed that bond yields have returned to attractive levels after an extended period of low returns, and that this dynamic, alongside concerns about equity market valuations, has prompted comparisons to the events of 1987.
On Friday, both the Dow Jones Industrial Average and the S&P 500 were tracking losses for the week. At that point, the Dow stood roughly 2.9% beneath its intraday peak of 54,744.33, set on Aug. 5. At the same time, the S&P 500 remained within roughly 2% of its 13 August high of 7,816.70.
The S&P 500's forward valuation multiple has eased to approximately 26 times earnings over the past year, though that figure sits close to the 29.24 reading recorded earlier in 2025, a level not seen since 2021.
Bond yields globally have been moving upward, driven in part by investor apprehension that higher energy costs stemming from the conflict with Iran may stoke inflationary pressures. Bond yields are also climbing as corporations take on additional borrowing to finance their expanding artificial intelligence expenditures, intensifying competition for available capital.
The current bond market differs from its 1987 counterpart, and a number of the foundational factors that contributed to Black Monday are absent from the present environment. Treasury yields remain well beneath the levels recorded four decades ago, meaning their recent uptick does not automatically point to an impending equity market downturn.
Goncalves noted that a pattern similar to 1987 may re-emerge, with investors potentially shifting toward bonds as a haven. Equities appear elevated in valuation terms, whereas fixed-income instruments look comparatively underpriced, he noted. Goncalves also noted that interest rates rose initially in 1987, after which investors began viewing bonds as a more appealing option than equities. Persistent elevated interest rates, he added, could draw previously reluctant bond investors back to fixed-income assets as a viable alternative.
