Former Lehman Brothers trader Larry McDonald has issued a stark warning regarding the current bond market, suggesting that its dynamics are increasingly resembling the conditions that preceded the 1987 stock market crash.
In a recent episode of The David Lin Report podcast, McDonald noted that bond yields are beginning to deliver what he described as “equity-like returns,” a development he views as a negative indicator for the stock market. He drew direct parallels between the present financial landscape and the months leading up to Black Monday.
The warning comes amid broader market volatility, with the Dow Jones Industrial Average and S&P 500 both posting losses, while the VIX, often referred to as the market’s fear gauge, rose significantly. Investors are closely watching these indicators as they assess the potential for further turbulence in the coming weeks.
The bond yield behavior is genuinely unsettling. If stocks and bonds both drop, there’s nowhere safe to hide right now.
Another Black Monday prediction? I’ve heard this exact same warning three times this year. History doesn’t always rhyme, folks.