Michael Belkin, a veteran quant strategist, warns that the bond market’s current stress levels resemble those before the 1987 crash, signalling potential risks for equities amid rising yields and global bond weakness.
Michael Belkin is warning investors that the bond market is flashing the kind of stress that, in his view, can precede a broader sell-off in equities. Speaking on Financial Sense, the former Salomon Brothers quant strategist said his model has been short bonds across a range of markets, and he argued that the current backdrop bears uncomfortable similarities to the months before the 1987 crash. The Belkin Report, which he has run for decades, is built around a forecasting framework that he says tracks direction, positioning and intensity over three- and 12-month horizons. According to his own profile material, the service is used by hedge funds, pension funds, insurers and family offices worldwide.
Belkin’s central concern is that rising yields are no longer being treated as a warning signal by stocks, even though he sees them as a sign that an extended era of artificially low borrowing costs is ending. In the Financial Sense interview, he said bond weakness is global, not limited to the US, with pressure also visible in Europe and parts of emerging markets. His historical comparison to 1987 is meant to stress that stocks can remain complacent for a time before forced selling in bonds spills over into equities. Material from his earlier reports shows that he has long used long-term trend breaks and threshold models to identify major turning points, including previous calls around the 2000 tech peak and subsequent downturns.
The market action beneath the headline indexes, he said, is also turning more defensive. Belkin pointed to weakness in cyclicals, financials and broker-dealers, while semiconductors and other technology shares have begun to lag despite still-strong earnings narratives tied to artificial intelligence. He argued that higher energy costs are feeding through into transport, freight and consumer prices, while also undercutting the idea that the economy is broadly insulated from rate pressures. His earlier commentary on junk bonds and emerging-market debt makes the same point: once credit spreads start widening, the strain often reaches asset managers, leveraged lenders and private equity firms that depend on cheap financing and ready exits.
Energy remains one of Belkin’s favoured areas, even as he said the market is too sanguine about supply risks in the Gulf. During the interview he said attacks on oil infrastructure have been underreported and that official narratives about supply normalisation do not match what his information feeds are showing. He also said the weakness in gold and gold miners has become a point of debate inside his own model, after a strong earlier rally and a more recent pullback. A separate Belkin Gold Stock Forecast page describes the publication as a bi-weekly service focused on identifying undervalued opportunities in the sector, which fits his broader view that precious metals can still play a role in a stress-prone macro environment.
For now, though, Belkin’s message is defensive. He said the cleanest response to a market he sees as vulnerable is to hold cash so that investors can act when valuations finally reset. His long-running publication pitches itself as a tool for spotting those shifts before they are obvious to everyone else, and his track record, according to the firm’s own materials, is part of what draws institutional clients back to his work. Whether or not the current warning proves as severe as 1987, his view is that the bond market is already telling a story that equities have not yet chosen to hear.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
