Larry McDonald, founder of The Bear Traps Report, states that current bond market conditions resemble the summer of 1987. During that period, the Dow reached a peak in August before declining by nearly 23% in October.
Corporate bonds from Alphabet and Oracle currently offer yields exceeding 7%. Oracle’s long-term debt yields between 7% and 8%, while Alphabet’s 100-year bond, issued in February 2026, trades at approximately 87 cents on the dollar.
McDonald notes that rising bond yields are beginning to attract capital away from equities. Institutional investors are increasingly drawn to fixed income as the yield gap between stocks and bonds narrows.
Historical data from 1987 shows that 10-year U.S. Treasury yields reached 9.89%, while U.K. 10-year gilts hit 10.12%. McDonald identifies rising energy prices as a factor that could further amplify recession risks.
The analyst suggests that if bond prices continue to fall, the resulting spike in yields could create significant buying opportunities in the fixed income sector.
