Black Monday’s stock-market warning signal came from the bond market, and it’s back, says Wall Street veteran

Larry McDonald, a veteran Wall Street strategist, is drawing a parallel between current bond-market conditions and the summer of 1987, just months before the "Black Monday" crash. His observation centers on bonds beginning to deliver "equity-like returns" — a dynamic that preceded the 1987 selloff, when shifting bond yields offered investors a competing source of return and helped destabilize stock valuations.

The comparison matters because bond markets are often watched as an early-warning system for equities. When fixed income starts offering stock-like performance, the relative appeal of equities can change, potentially pulling capital in a different direction. That does not mean history is repeating, but it highlights a relationship between the two asset classes that investors may want to monitor.

What to watch: the trajectory of bond yields and total returns relative to stocks. If the pattern McDonald describes persists, it could signal a shift in how markets price risk across asset classes. The takeaway is not a prediction, but a reminder that cross-asset signals — particularly from bonds — can carry information for equity investors.