RatesMarket noteMonday 5 October 2026, 21:55
Bond yields and Black Monday: why 1987 is the wrong warning for 2026
A chart pairing 1987 with 2026 says rising yields end in a crash. Since 1962 the 10-year has jumped 100bp by October in nine years, and only 1987 crashed. The real risk is real yields.
By The Notebook Desk
A chart going round social media puts two lines side by side: the 10-year Treasury yield from January to October 1987, and the same months of 2026. The lines look alike. The first ended in Black Monday, 19 October 1987, when the Dow Jones Industrial Average fell 508 points, or 22.6%, “the largest one-day stock market decline in history”, in the words of the Federal Reserve’s history of the crash. The message is that this year could end the same way.
It is a good scare and a poor guide. The comparison fails on size, on history and on what happened in 1987. But the chart does point at something real.
The two lines are drawn on different scales
Each panel in the chart has its own axis, which hides the gap. In 1987 the 10-year yield went from 7.18% on 2 January to 10.23% on Friday 16 October, a rise of 305 basis points, by the Fed’s daily series for the 10-year yield. This year it has gone from 4.19% to 5.28% on 2 October. That is 109bp, about a third of the 1987 move.
The bond buyer of 1987 was also paid far more. Consumer prices were 4.4% higher than a year earlier in September 1987, by the Bureau of Labor Statistics index, so a 10.23% yield paid almost six points above inflation. Prices rose 3.4% in the year to August 2026.
One crash in nine years
Big rises in yields between January and October are not rare. Since 1962 the 10-year yield has climbed 100bp or more from the first trading day of the year to mid-October in nine years. Only one of them, 1987, ended in a crash.
The two most recent cases went the other way. In 2022 the yield peaked for the year at 4.25% on 24 October. The S&P 500 had made its low for the year on 12 October and rose 7.3% from there by the end of December. In 2023 the 10-year peaked at 4.98% on 19 October. The S&P 500 hit bottom eight days later and finished the year 15.8% higher.
Nor is October special for bonds. The year’s highest 10-year yield came in October in only four of the 64 years from 1962 to 2025. January and December were more common.
What the chart leaves out of 1987
Stocks were already falling. “Beginning on October 14, a number of markets began incurring large daily losses,” the Fed’s history says, and the Dow lost 4.6% on Friday 16 October alone. Black Monday came at the end of a slide, not out of a calm market. This year the S&P 500 closed at 7,722.72 on 2 October, 1.0% below its record close of 13 August.
The bond market did not turn on its own either. On Black Monday the 10-year yield fell only 8bp, to 10.15%. The big drop, 75bp to 9.40%, came the next day, when Alan Greenspan said the Fed stood ready “to serve as a source of liquidity to support the economic and financial system”. Bonds topped out because the crash brought in the Fed, not only because money ran to safety.
The worry that is real
Take away the 1987 story and the chart still shows something worth watching: long-term borrowing costs rising in several countries while shares sit close to records.
Most of this year’s rise in US yields is in real yields, not inflation, as we wrote on 29 September. The 10-year inflation-protected yield closed at 2.93% on 30 September, the highest since November 2008, and at 2.92% on Friday. The 10-year yield itself ended the week at its highest Friday close since 2002, as we reported on Sunday.
Europe is under the same pressure. France’s 10-year yield averaged 4.00% in August, its highest monthly average since 2008, by ECB figures, 82bp above Germany’s. Last week the gap reached about 140bp, FXStreet reported. US Treasuries did not gain from France’s trouble: the 10-year yield rose 11bp in the same week. That looks less like money fleeing Europe for safety and more like one sell-off of long-term debt across countries.
A real yield near 3% raises the rate at which investors discount future profits, and it makes a safe bond a closer rival to shares. So far shares have not minded. That is the part of 1987 worth remembering. By late August that year, the Fed’s history notes, the Dow had gained 44% in seven months, while the 10-year yield rose from 7.18% to 8.73%. Stocks can ignore rising yields for months, and then stop.
The warning, then, is not a date in the calendar. It is real yields that keep rising while share prices do not react.
What to watch
| Date | Event | Why it matters |
|---|---|---|
| 6 Oct | Auction of $58bn of 3-year notes | The first test of demand at these yields |
| 7 Oct | Auction of $39bn of 10-year notes, and the minutes of the September Fed meeting | Demand at the maturity in the chart |
| 8 Oct | Auction of $22bn of 30-year bonds | The longest maturity Treasury sells |
| 14 Oct | US consumer prices for September | Whether inflation gives bonds another push |
| 27–28 Oct | Fed meeting | The next decision on rates |
Disclosure
This is analysis and opinion, not investment advice.