Economist Peter Schiff has fired a warning shot at investors, drawing parallels between the current market conditions and the 1987 stock market crash.

What Happened: In a recent tweet, Schiff compared the current rise in Treasury yields to the situation in 1987 when the yield on 10-year Treasuries rose from 7% to 10% by October. Despite the Dow soaring over 30% by August, it eventually collapsed by over 30%. Schiff asserts that the present rate rise poses an even greater risk.

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This tweet comes after Schiff’s previous warnings about the riskiness of long-term U.S. Treasuries and his prediction of a “trifecta of doom” — a rise in bond yields, oil, and gold — signaling entrenched inflation and dwindling confidence in the Fed and U.S. fiscal solvency.

Why It Matters: On Wednesday, the benchmark U.S. 10-year Treasury yields moved higher making a move towards the 5% mark they had breached briefly on Monday. The 10-year yield was noted at 4.959 at the time of publishing.

A sell-off took place on the stock markets on Wednesday with the S&P 500 falling 1.4% and ending the trading below the 4,200 mark. The tech-heavy Nasdaq fell 2.4%, while the Dow declined 0.3%.

Schiff’s recent tweets continue to underscore his concerns about long about long-term U.S. Treasuries. He has previously stated that they are one of the riskiest assets and investors need a new safe haven, suggesting gold as a viable alternative.

In another warning Schiff drew, Schiff drew attention to the potential impact of a rise in bond yields, oil, and gold, referring to it as a "trifecta of doom" that indicates entrenched inflation and a loss of confidence in the Federal Reserve and U.S. fiscal solvency.

Photo Courtesy: Wikimedia Commons

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