By specifying a filename in the compile function and then improperly terminating it, we are able to return the first line of any file.

>> compile('yield', '/etc/passwd', 'exec')
File "/etc/passwd", line 1
    root:x:0:0:root:/root:/bin/bash
    ^
SyntaxError: 'yield' outside function

Is this intended behavior? I have been able to use it to escape sandboxes.

It's not necessarily the first line. The code is executed with the context of the given file. Hence the corresponding line number of error from traceback with respect to file is printed.

$ cat /tmp/passwd
line 1
line 2
line 3
line 4

$ python3 -c 'compile("\n\n\nyield", "/tmp/passwd", "exec")'
Traceback (most recent call last):
  File "<string>", line 1, in <module>
  File "/tmp/passwd", line 4
    line 4
    ^
SyntaxError: 'yield' outside function

Yes, that is expected behavior.

 Python is not designed for sandboxing and doesn't support sandboxing. *If* Python would support sandboxing, then compile() would be one of the first functions to go, because it allows an attacker to construct custom executable code.