diff --git a/lib/output.js b/lib/output.js
index 2f8faf7d..47d07678 100644
--- a/lib/output.js
+++ b/lib/output.js
@@ -799,6 +799,10 @@ function OutputStream(options) {
         // a = yield 3
         if (p instanceof AST_Binary && p.operator !== "=")
             return true;
+        // (yield 1)()
+        // new (yield 1)()
+        if (p instanceof AST_Call && p.expression === this)
+            return true;
         // (yield 1) ? yield 2 : yield 3
         if (p instanceof AST_Conditional && p.condition === this)
             return true;
diff --git a/lib/parse.js b/lib/parse.js
index ee904962..fb381ec3 100644
--- a/lib/parse.js
+++ b/lib/parse.js
@@ -1168,10 +1168,6 @@ function parse($TEXT, options) {
 
     function labeled_statement() {
         var label = as_symbol(AST_Label);
-        if (label.name === "yield" && is_in_generator()) {
-            // Ecma-262, 12.1.1 Static Semantics: Early Errors
-            token_error(S.prev, "Yield cannot be used as label inside generators");
-        }
         if (label.name === "await" && is_in_async()) {
             token_error(S.prev, "await cannot be used as label inside async function");
         }
@@ -1331,7 +1327,7 @@ function parse($TEXT, options) {
         if (name && ctor !== AST_Accessor && !(name instanceof AST_SymbolDeclaration))
             unexpected(prev());
 
-        var args = parameters();
+        var args = [];
         var body = _function_body(true, is_generator || is_generator_property, is_async, name, args);
         return new ctor({
             start : args.start,
@@ -1402,9 +1398,8 @@ function parse($TEXT, options) {
         return tracker;
     }
 
-    function parameters() {
+    function parameters(params) {
         var start = S.token;
-        var params = [];
         var used_parameters = track_used_binding_identifiers(true, S.input.has_directive("use strict"));
 
         expect("(");
@@ -1424,7 +1419,6 @@ function parse($TEXT, options) {
         }
 
         next();
-        return params;
     }
 
     function parameter(used_parameters, symbol_type) {
@@ -1511,12 +1505,7 @@ function parse($TEXT, options) {
                     }
                 } else if (is("name")) {
                     used_parameters.add_parameter(S.token);
-                    elements.push(new symbol_type({
-                        start: S.token,
-                        name: S.token.value,
-                        end: S.token
-                    }));
-                    next();
+                    elements.push(as_symbol(symbol_type));
                 } else {
                     croak("Invalid function parameter");
                 }
@@ -1566,11 +1555,8 @@ function parse($TEXT, options) {
                 }
                 if (is("name") && (is_token(peek(), "punc") || is_token(peek(), "operator")) && [",", "}", "="].indexOf(peek().value) !== -1) {
                     used_parameters.add_parameter(S.token);
-                    var value = new symbol_type({
-                        start: S.token,
-                        name: S.token.value,
-                        end: S.token,
-                    });
+                    var start = prev();
+                    var value = as_symbol(symbol_type);
                     if (is_expand) {
                         elements.push(new AST_Expansion({
                             start: expand_token,
@@ -1579,13 +1565,12 @@ function parse($TEXT, options) {
                         }));
                     } else {
                         elements.push(new AST_ObjectKeyVal({
-                            start: prev(),
-                            key: S.token.value,
+                            start: start,
+                            key: value.name,
                             value: value,
                             end: value.end,
                         }));
                     }
-                    next();
                 } else if (is("punc", "}")) {
                     continue; // Allow trailing hole
                 } else {
@@ -1642,12 +1627,7 @@ function parse($TEXT, options) {
             });
         } else if (is("name")) {
             used_parameters.add_parameter(S.token);
-            next();
-            return new symbol_type({
-                start: prev(),
-                name: prev().value,
-                end: prev()
-            });
+            return as_symbol(symbol_type);
         } else {
             croak("Invalid function parameter");
         }
@@ -1701,6 +1681,7 @@ function parse($TEXT, options) {
             S.in_generator = S.in_function;
         if (is_async)
             S.in_async = S.in_function;
+        if (args) parameters(args);
         if (block)
             S.in_directives = true;
         S.in_loop = 0;
@@ -1708,10 +1689,8 @@ function parse($TEXT, options) {
         if (block) {
             S.input.push_directives_stack();
             var a = block_();
-            if (S.input.has_directive("use strict")) {
-                if (name) strict_verify_symbol(name);
-                if (args) args.forEach(strict_verify_symbol);
-            }
+            if (name) _verify_symbol(name);
+            if (args) args.forEach(_verify_symbol);
             S.input.pop_directives_stack();
         } else {
             var a = expression(false);
@@ -2593,9 +2572,14 @@ function parse($TEXT, options) {
                 unexpected(tmp);
             }
           case "name":
-            if (tmp.value == "yield" && !is_token(peek(), "punc", ":") && !is_token(peek(), "punc", "(")
-                && S.input.has_directive("use strict") && !is_in_generator()) {
-                token_error(tmp, "Unexpected yield identifier inside strict mode");
+            if (tmp.value == "yield") {
+                if (is_in_generator()) {
+                    token_error(tmp, "Yield cannot be used as identifier inside generators");
+                } else if (!is_token(peek(), "punc", ":")
+                    && !is_token(peek(), "punc", "(")
+                    && S.input.has_directive("use strict")) {
+                    token_error(tmp, "Unexpected yield identifier inside strict mode");
+                }
             }
           case "string":
           case "num":
@@ -2626,9 +2610,19 @@ function parse($TEXT, options) {
         });
     };
 
-    function strict_verify_symbol(sym) {
-        if (sym.name == "arguments" || sym.name == "eval")
-            croak("Unexpected " + sym.name + " in strict mode", sym.start.line, sym.start.col, sym.start.pos);
+    function _verify_symbol(sym) {
+        var name = sym.name;
+        if (is_in_generator() && name == "yield") {
+            token_error(sym.start, "Yield cannot be used as identifier inside generators");
+        }
+        if (S.input.has_directive("use strict")) {
+            if (name == "yield") {
+                token_error(sym.start, "Unexpected yield identifier inside strict mode");
+            }
+            if (sym instanceof AST_SymbolDeclaration && (name == "arguments" || name == "eval")) {
+                token_error(sym.start, "Unexpected " + name + " in strict mode");
+            }
+        }
     }
 
     function as_symbol(type, noerror) {
@@ -2636,13 +2630,8 @@ function parse($TEXT, options) {
             if (!noerror) croak("Name expected");
             return null;
         }
-        if (is("name", "yield") && S.input.has_directive("use strict")) {
-            token_error(S.prev, "Unexpected yield identifier inside strict mode");
-        }
         var sym = _make_symbol(type);
-        if (S.input.has_directive("use strict") && sym instanceof AST_SymbolDeclaration) {
-            strict_verify_symbol(sym);
-        }
+        _verify_symbol(sym);
         next();
         return sym;
     };
@@ -2870,7 +2859,7 @@ function parse($TEXT, options) {
                 next();
                 return _yield_expression();
             } else if (S.input.has_directive("use strict")) {
-                token_error(S.token, "Unexpected yield identifier inside strict mode")
+                token_error(S.token, "Unexpected yield identifier inside strict mode");
             }
         }
 
diff --git a/test/compress/yield.js b/test/compress/yield.js
index d64605b1..cb11147c 100644
--- a/test/compress/yield.js
+++ b/test/compress/yield.js
@@ -88,9 +88,8 @@ yield_before_punctuators: {
         })();
         function* g1() { (yield) }
         function* g2() { [yield] }
-        function* g3() { return {yield} } // Added return to avoid {} drop
-        function* g4() { yield, yield; }
-        function* g5() { (yield) ? yield : yield; }
+        function* g3() { yield, yield; }
+        function* g4() { (yield) ? yield : yield; }
     }
     expect: {
         iter = (function*() {
@@ -98,9 +97,8 @@ yield_before_punctuators: {
         })();
         function* g1() { (yield) }
         function* g2() { [yield] }
-        function* g3() { return {yield} }
-        function* g4() { yield, yield; }
-        function* g5() { (yield) ? yield : yield; }
+        function* g3() { yield, yield; }
+        function* g4() { (yield) ? yield : yield; }
     }
 }
 
@@ -199,3 +197,21 @@ yield_as_ES5_property: {
     expect_exact: '"use strict";console.log({yield:42}.yield);'
     expect_stdout: "42"
 }
+
+issue_2689: {
+    options = {
+        collapse_vars: true,
+        unused: true,
+    }
+    input: {
+        function* y() {
+            var t = yield x();
+            return new t();
+        }
+    }
+    expect: {
+        function* y() {
+            return new (yield x());
+        }
+    }
+}
diff --git a/test/mocha/yield.js b/test/mocha/yield.js
index 26a66ec1..ce286968 100644
--- a/test/mocha/yield.js
+++ b/test/mocha/yield.js
@@ -8,18 +8,6 @@ describe("Yield", function() {
         assert.strictEqual(result.code, 'function*foo(e){return yield 1,yield 2,3}');
     });
 
-    it("Should not allow yield as labelIdentifier within generators", function() {
-        var js = "function* g() {yield: 1}"
-        var test = function() {
-            UglifyJS.parse(js);
-        }
-        var expect = function(e) {
-            return e instanceof UglifyJS.JS_Parse_Error &&
-                e.message === "Yield cannot be used as label inside generators";
-        }
-        assert.throws(test, expect);
-    });
-
     it("Should not allow yield* followed by a semicolon in generators", function() {
         var js = "function* test() {yield*\n;}";
         var test = function() {
@@ -65,42 +53,68 @@ describe("Yield", function() {
         );
     });
 
+    var identifiers = [
+        // Fail in as_symbol
+        'import yield from "bar";',
+        'yield = 123;',
+        'yield: "123";',
+        'for(;;){break yield;}',
+        'for(;;){continue yield;}',
+        'function yield(){}',
+        'try { new Error("")} catch (yield) {}',
+        'var yield = "foo";',
+        'class yield {}',
+        // Fail in as_property_name
+        'var foo = {yield};',
+    ];
+
     it("Should not allow yield to be used as symbol, identifier or shorthand property outside generators in strict mode", function() {
-        var tests = [
-            // Fail in as_symbol
-            '"use strict"; import yield from "bar";',
-            '"use strict"; yield = 123;',
-            '"use strict"; yield: "123";',
-            '"use strict"; for(;;){break yield;}',
-            '"use strict"; for(;;){continue yield;}',
-            '"use strict"; function yield(){}',
-            '"use strict"; function foo(...yield){}',
-            '"use strict"; try { new Error("")} catch (yield) {}',
-            '"use strict"; var yield = "foo";',
-            '"use strict"; class yield {}',
-
-            // Fail in maybe_assign
-            '"use strict"; var foo = yield;',
-            '"use strict"; var foo = bar = yield',
-
-            // Fail in as_property_name
-            '"use strict"; var foo = {yield};',
-        ];
-
-        var fail = function(e) {
+        function fail(e) {
             return e instanceof UglifyJS.JS_Parse_Error &&
                 /^Unexpected yield identifier (?:as parameter )?inside strict mode/.test(e.message);
         }
 
-        var test = function(input) {
+        function test(input) {
             return function() {
                 UglifyJS.parse(input);
             }
         }
 
-        for (var i = 0; i < tests.length; i++) {
-            assert.throws(test(tests[i]), fail, tests[i]);
+        identifiers.concat([
+            // Fail in as_symbol
+            "function foo(...yield){}",
+            // Fail in maybe_assign
+            'var foo = yield;',
+            'var foo = bar = yield',
+        ]).map(function(code) {
+            return '"use strict"; ' + code;
+        }).forEach(function(code) {
+            assert.throws(test(code), fail, code);
+        });
+    });
+
+    it("Should not allow yield to be used as symbol, identifier or shorthand property inside generators", function() {
+        function fail(e) {
+            return e instanceof UglifyJS.JS_Parse_Error && [
+                "Unexpected token: operator (=)",
+                "Yield cannot be used as identifier inside generators",
+            ].indexOf(e.message) >= 0;
         }
+
+        function test(input) {
+            return function() {
+                UglifyJS.parse(input);
+            }
+        }
+
+        identifiers.map(function(code) {
+            return "function* f() { " + code + " }";
+        }).concat([
+            // Fail in as_symbol
+            "function* f(yield) {}",
+        ]).forEach(function(code) {
+            assert.throws(test(code), fail, code);
+        });
     });
 
     it("Should allow yield to be used as class/object property name", function() {